First, let’s consider the good news. Things are looking up on the marriage front, according to multiple researchers. The divorce rate among adults in the 25-39 year old age group went down between 1990 and 2015, dropping more than 20 percent. Among adults in their 40s, the divorce rate is up slightly, but overall is more or less unchanged.
But now for the bad news: when you look at the older segment of marriages, between spouses aged 50-plus, the good news turns sour. The rate of divorce among these more senior couples more than doubled during that same 25 year time period. (This is according to a Pew Research study from last year.) Among those even older – spouses 65 and up – the divorce rate has roughly tripled since 1990. What is going on here?
A column in the Washington Post by nationally syndicated financial expert Michelle Singletary brought this dire situation to our notice. The column, which appeared earlier this week, sounds the alarm about this worrisome trend: “A ‘grey divorce’ can devastate your retirement plans,” Singletary warns. Here at AgingOptions we have walked this sad path too many times with our clients and we can attest to the fact that, as emotionally wrenching as divorce in one’s senior years can be, the financial trauma can be even worse. Before we explain why, and describe how a LifePlan can help mitigate some of the pain of economic loss, let’s examine this sad state of affairs in a bit more detail.
“Heading into retirement, more couples are calling it quits,” Singletary writes in the Washington Post. “Their children are now adults, and they decide they no longer want to be married.” This change of heart can sometimes accompany the significant lifestyle changes that come when work life stops, changes that may bring about a deep restlessness for which many retirees are unprepared. Singletary adds, “Facing retirement — another 20 or 30 years in the second season of their lives — some couples decide they would rather not spend it with spouses they no longer like or have anything in common with.” She quotes Joseph Coughlin, founder of the AgeLab at the Massachusetts Institute of Technology, who puts it this way: “Retirement is often envisioned as a life stage where a couple finally gets time together. The kids are gone, the work is done; now there is time for us.” Unfortunately, that extra time can aggravate underlying tensions and force an adjustment for which some couples are ill-prepared. “That uninterrupted time together may not always be the reward that many assume as they plan for retirement,” says Coughlin.
Aside from the deep emotional pain resulting from the death of a marriage that has been three or four decades in the making, there are very real and typically very severe financial consequences to a late-in-life divorce, says Singletary. “The breaking up of these marriages can have a profound impact on retirement savings forcing people to readjust their plans,” she warns. Retirement accounts and pension funds usually have to be divided, something that requires expert advice in order to avoid major tax consequences. We learned more about this dilemma as we read this article about Grey Divorce from an issue of Kiplinger last fall. “While becoming unwillingly single can be difficult at any stage of life,” the Kiplinger article says, “splitting up after the age of 50 can be doubly devastating, because you have a limited amount of time to financially recover before retirement.” The author, financial advisor Scott Hanson, states that “no matter what the underlying cause, divorce is expensive, and once it becomes inevitable, you have little choice but to reactively take steps to protect yourself financially.”
To start with, there’s the cost of legal fees, which Kiplinger’s Hanson warns can easily escalate past $25,000 even in an amicable divorce. When battles over possessions and finances become bitter and drawn out, the “fee meter” really begins running overtime. Liquidating 401(k) accounts has to be done in a way that doesn’t decimate the balance with sky-high taxes and possible penalties. Dividing up a brokerage account improperly can lead to risks of high capital gains taxes. That says nothing about the fight over the house, the cars and the furniture. Even custody of the family pet can lead to mounting legal bills. The net result is typically two bitter ex-spouses, each less well-prepared for their retirement future than if they had stayed married.
Here at AgingOptions, we’re not marriage counselors, but we can provide you with planning tools to help you meet the challenges of what lies ahead in retirement, whether you’re married or single. We strongly encourage both you and (if you’re married) your spouse to accept our invitation and attend a free LifePlanning Seminar with Rajiv Nagaich. There you’ll discover the power of what we call a LifePlan, which is a comprehensive and holistic retirement plan weaving together the critical elements you must consider: your finances, your housing choices, your need for medical coverage, your requirements for legal protection, and your communication with those closest to you. We’ve seen couples on the brink of divorce due to financial stress actually come away from a LifePlanning Seminar with a new-found resolve to stay together and get their retirement future back on an even keel. It’s time to know your options! You’ll find all the details regarding upcoming LifePlanning Seminars – dates, times, locations and online registration – by clicking on this link. (Of course, if you choose you can always call our office during the work week for assistance.)
No matter whether you’re happily married, divorced, never married, widowed or separated – whatever your situation – an AgingOptions LifePlan is your very best next step toward retirement security. It will be a pleasure to meet you at a seminar soon.