By Tim Grant
Divorce can be a devastating event at any stage of life. But the stakes are even higher for divorcing couples after the children have left the nest and retirement looms.
“Post-50 divorce can impact the financial position of both men and women,” said Linda Pasquini, director of the Pittsburgh-based TIAA-CREF field consulting group. “In part, because retirement costs can be considerably more cumbersome for an individual as opposed to a couple — as much as 40 percent to 50 percent higher.
“It can also be more difficult for women to establish individual financial security if they have spent time out of the labor force and have less of their own salary and savings,” she said.
“But the biggest consequence of a mid-to-later life split is that often there’s less time to recover financially.”
A 2013 study from the National Center for Marriage & Family Research at Bowling Green State University titled “The Gray Divorce Revolution: Rising Divorce Among Middle-aged and Older Adults, 1990-2010” found one in four people who divorced in 2010 was 50 or older, which led researchers to conclude the tendency for older couples to call it quits is becoming more common.
Although divorce has been studied extensively among younger adults, much of the research has ignored adults over 50.
Yet, the Bowling Green study notes, baby boomers were the first cohort to divorce and remarry in large numbers during young adulthood.
Now that they are in their 50s and 60s, it stands to reason that a growing number of older adults will divorce since the researchers also found remarriages are more likely than first marriages to end in divorce.
Other factors are also at play in the trend. Older adults are becoming more accepting of divorce as they know more people who have gone through it.
With more women working, those with jobs are better able to support themselves outside of marriage. And with people living longer, there’s a longer period in which marriages could fall apart.
Divorcing after 50 often means dealing with financial issues not typically faced by younger couples, such as dividing up retirement plans, real estate holdings and businesses, as well as dealing with debt issues.
There is not always a dependent spouse. When both partners are working, there are many times they both just walk away, losing tax benefits and shared expenses but not much else — financially, at least.
Lisa Turbeville, a Mt. Lebanon certified divorce financial analyst, said the majority of clients she works with in her firm are over 50.
“Generally speaking, the dependent spouse has the most challenges going forward,” said Ms. Turbeville, owner of Watermark Financial.
A non-working spouse, often female, stands to lose social status and financial security. Also, an important role that she played — raising children — no longer exists. Even if she is financially stable, the divorce is devastating from an emotional standpoint.
Many couples haven’t saved enough for retirement, Ms. Turbeville said. “When they get divorced under those circumstances, it becomes nearly impossible to recover and they both have to work until age 70 or beyond.
“The dependent spouse usually must have to pay for their own health insurance when they divorce and that’s an added expense.”
Ms. Pasquini said the first and most crucial step for older divorcing couples is to get a complete picture of their assets, including those each brought into the marriage and those they built together.
Both also may be accountable for jointly held credit cards or loans, so each needs to get a full credit report.
With everything on the table, the husband and wife can start facing some of the difficult decisions. Such as:
–If you’re eligible, should you opt for monthly alimony or a lump sum?
–Should you take the assets in the brokerage account or your ex’s workplace retirement account, or trade your share in the house for a greater percentage of these cash assets?
–How much readily accessible money will you need as you start out on your own? If you need cash in case of an emergency, which accounts should you tap first and what are the tax consequences?
Social Security is another big issue to consider.
The dependent spouse may be able to receive as much as half the ex’s Social Security benefit, even if the ex has remarried. But as Ms. Turbeville points out, both will end up losing when the household income is split.