This week, I’m talking about gray divorce. Gray divorce refers to the skyrocketing trend of divorce rates among those aged 50 and older. In fact, over the last 25 years, the divorce rate has doubled for Americans over 50 and tripled for Americans over 65. 

Yesterday I talked about how gray divorce is especially hard on women, with an estimated drop in standard of living by 45% and a post divorce poverty rate of 27%. 

Today, I’m talking about 5 ways divorce will impact your finances in retirement. I touched on a couple of these briefly yesterday, but today I want to dive deeper into each of these. 

The most obvious way that a gray divorce will impact your finances in retirement is the asset split. If you as a couple had $1 million dollars and you were set for retirement, but get divorced 2 years before you planned to retire, you’re likely going to need to go back to the drawing board on your retirement plans and make some major adjustments to your retirement lifestyle. If you opt to keep the house and take less of the financial assets, it’s an even bigger dilema. You may have to work longer or drastically reduce your spending in retirement, or both, to help ensure you won’t run out of money. 

The second way that gray divorce impacts your finances in retirement is social security. For many of you listening, social security makes up a big portion of your retirement income each month. If that’s cut in half or ⅔ or more because you divorced and you made less money than your spouse, it can be problematic.

The third way a gray divorce can impact your finances in retirement is lower income. Whether that’s through lower assets in your retirement portfolio or social security like I just mentioned, or maybe you have a spouse who is still working full time or part-time, no matter what your circumstances, you can expect that your income will be lower, usually substantially so. And because kids are grown up and out of the house, continued spousal support could be a lot less as well. 

The fourth and probably rarely considered way that gray divorce impacts your finances is long-term care. There’s a high likelihood that you’ll need some kind of long-term care at some point in your life, usually later in life. This could be as little as help around the house with everyday chores and activities to suffering from altzheimers and needing 24/7 help in a memory care facility. When you’re married and the other spouse is healthy, they can usually help shoulder the burden and reduce the need to pay for outside help. When you’re on your own, you’re on your own for long-term care, so it’s important to consider how you’ll cover the cost if you’re divorced and you’ll need long-term care. 

Lastly, gray divorce impacts your finances in retirement because of the changes it necessitates to estate planning. If you get divorced, you’ll probably want to reconsider your beneficiaries and it will likely adjust how you deal with your estate. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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