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As if shingles and knee replacements weren't enough to worry about when you hit your 50s, divorce is yet another thing to fret over, and with good reason. For those 55 to 64 years old, the divorce rate has more than doubled, from five divorces per 1,000 marriages in 1990 to 12 per 1,000 in 2017, according to the National Center for Family and Marriage Research at Bowling Green University.
It's a worrisome trend. For all the emotional pain divorce causes, financial pain is a big part of calling it quits, too, particularly if you have decades’ worth of accumulated assets and commingled accounts. If you're considering a late-life divorce, or if you're already in the middle of one, make sure you weigh all the financial ramifications.
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There's no way to sugarcoat those ramifications. For starters, your wealth will drop by half, assuming you split everything equally. At the same time, your expenses will increase: separate residences and two sets of bills for everything from utilities to insurance. Researchers found the standard of living for women who divorce after 50 drops an average 45 percent; for men, it's 21 percent.
The problems continue into retirement. You'll have to split your retirement funds, which can mean a considerable reduction in the amount of income you get when you start tapping your nest egg. Even worse, 48 percent of households headed by someone 55 and older lack any form of retirement savings, according to the latest estimates by the U.S. Government Accountability Office (GAO).
The older you are, the greater the impact divorce can have. “A 50-year-old divorcee is very different than a 65-year-old divorcee,” says Robin Graine, a certified divorce financial analyst in Reston, Virginia. “I've had a few women clients quite recently who jump-started their careers at 50. They wouldn't have done that at 65.”
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Income and retirement savings aren't the only financial problems from divorce. If you have children, it's likely your divorce will reduce or eliminate any inheritance they receive — particularly if your ex-spouse remarries. “The new spouse is next in line, not the kids,” Graine says.
In addition, the home you had planned to retire in will probably have to be sold and the proceeds split. And, because you've lost the person you had counted on to care for you in old age, you'll have to think about long-term care insurance, which is costly, or count on your adult children for care.
Health & Wellness Dental insurance plans for members and their families See more Health & Wellness offers >Your first reaction to divorce may well be rage, and many former spouses probably do deserve the cobra pit. But it's best to rise above that. “In divorce, everyone is in pain, and when you're in pain you tend to do short-term decision making,” says Megan Gorman, a tax attorney and the owner of Chequers Financial Management in San Francisco. “You have to be playing the long game."
If you have children, for example, how you treat your spouse in divorce could color your relationship with them for a long time. Generosity to your spouse can help you repair that relationship. And a contentious, drawn-out divorce will simply draw out the expense and pain. Mark Bass, a financial planner in Lubbock, Texas, recalls a divorce negotiation that went off the rails over a chain saw left in the couple's toolshed. Ultimately, their divorce cost tens of thousands of dollars more in legal fees. “A chain saw?” Bass asks rhetorically. “Let go of the emotions and let it go."
