For some couples, retirement is when they feel they finally get a chance to spend time together after decades of working hard to build their lives. For others, it leads to a realization that they’re living with someone they don’t love anymore.
Starting over after a long marriage is scary, but it’s becoming more and more common. In fact, according to the Pew Research Center, the divorce rate for people age 50 or older has doubled since the 1990s. This trend, known as “gray divorce,” presents new challenges and opportunities for couples deciding to call it quits – often after many years together.
In some ways, divorcing later in life is easier because there are no issues of child custody to worry about. However, there are unique financial challenges to consider, including reduced retirement funds and long-term alimony payments.
Divorce later in life takes a toll on retirement funds
Just like any other divorce, splitting up later in life means that your assets will be divided. Retirement accounts are split up, leaving you with dramatically less to retire on than you may have planned. This can be daunting for many people divorcing in their 50’s, 60’s, and 70’s because they have less time to rebuild financially. Essentially, divorce has the same effect as beginning to save for retirement too late.
It’s important to be strategic when it comes to dividing up assets, including retirement funds. It may be tempting to give up retirement funds in exchange for keeping your marital home but remember: unlike custody arrangements and spousal support, property division is nearly impossible to modify after the divorce is finalized.
Alimony payments will likely be for life
Termed “spousal maintenance” or “spousal support” in New York, alimony payments are calculated according to specific guidelines relating to each spouse’s income. Unlike divorces between young people, when divorcing at an older age these payments are often awarded for life. Spousal maintenance is meant to offset financial inequality following divorce, and when older people split up the lower or no income spouse often has a harder time becoming financially independent.
Even with these financial challenges, divorce may still be the best option for many people who are heading in to or are already in, retirement. Keeping a level head and weighing the costs and benefits can smooth out the process and leave you in a better position to start your next adventure.