When you say “I do,” the premise is that you’re making a lifetime commitment to your spouse. But in some cases, happily ever after doesn’t last quite as long as you’d hoped. Sadly, anywhere from 40-50% of marriages in the U.S. end in divorce. Even more startling is the fact that Baby Boomers are getting divorced at record rates. In fact, the divorce rate among those aged 50 and older has doubled since the 1990s. But if you get divorced when you’re older, you’ll have more to worry about than custody battles and co-parenting.
Divorce can have severe financial implications, especially among those who have already retired or are preparing to retire in just a few years. Although one would hope that you and your partner can be together for the rest of your lives, you may want to plan ahead to ensure that your financial future won’t be derailed if divorce shakes everything else up.
The average age of retirement in the U.S. is 63, though many people will continue working past this age or will choose to retire earlier. In or leading up to retirement, many people will carefully plan out their expenses and their retirement needs. But thanks to a variety of factors — including the fact that many people are living longer — most individuals now need more money to live off of for a longer period of time. When divorce enters the picture, that can radically alter your ability to live in the way you planned. Anyone going through a divorce, regardless of age, should conduct a cash-flow analysis to gain a more complete understanding of their income and their expenses. Usually, the results will prompt an individual to find ways to reduce costs and increase money coming in. But unless you know for sure, you won’t be able to have peace of mind.
Of course, you’ll also need to figure out how to divide your assets and do some research on tax considerations that might affect you, especially if you find you’ll need to withdraw on your retirement plan early. Divorce can also impact Social Security benefits, sometimes in a positive way. Older couples who have been married for more than 10 years and who do not remarry are entitled to half of the benefits from their ex-spouses — even if the spouse delays filing for benefits. Alimony payments can also impact seniors who divorce, as can child support payments for some.
It’s a good idea to take this opportunity to update all estate plans and health insurance coverage during this time, as well. You’ll need to replace the names of beneficiaries and explore your options for healthcare policies, particularly if you re not yet eligible for Medicare. Since four in five older people have at least one daily medication to take, you’ll want to make certain you’re covered, either through your own employer or through the insurance marketplace.
Divorcing in your twilight years may seem unfathomable, but it’s a reality for many older couples. To ensure that you’re able to make smart financial decisions, you’ll need to plan ahead as best as you can and do your research. You may also want to consider hiring a financial professional to help you sort out all the details and figure out what needs to be done.