It’s an unfortunate statistic that everyone knows –
more than 50% of marriages will end in divorce. But
it’s also a statistic that has lost its impact. So, let’s try
In the United States, we see:
1 divorce approximately every 36 seconds;
Almost 2,400 divorces per day;
16,800 divorces per week; and
876,000 divorces a year.
Further, data from the Bowling Green's National
Center for Family & Marriage Research shows that
the divorce rate for 55- to 64-year-olds more than
doubled from 1990 to 2012 while divorces for the
over-65 group tripled.
The retirement killer
Now, while every divorce is unique in its own way, the
reality is that there is usually one common theme in
all divorces – it destroys retirement. And while every
divorced person feels the financial impact, baby
boomers suffer more – and the impact among women
baby boomers is among the worse.
According to a study from economists Claudia Olivetti
of Boston College and Dana Rotz of Mathematica
Policy Research, the later in life a woman divorces,
the more likely she will be working full time late in life.
Analyzing data from over 50,000 women, the
researchers found that women who divorced in their
50s were more than 10 percentage points more likely
to be working full time from ages 50 to 74 – compared
to women who divorced before age 30.
And the immediate financial impact of divorce goes
beyond legal fees. While the best of scenarios might
see a 50/50 split of assets, the pie is always smaller
than both parties realize. And once assets are
divided, say in half, then the expenses double – two
homes to manage or rents to cover, two utility bills to
pay, two car payments to make, etc.
Why is it worse for women, generally speaking? Well
for many women – especially those with children – they often trade away retirement assets to hold
onto the family home. And sadly, this means they
need to start saving for retirement all over again –
without the benefit of time.
The cost of starting over
Let’s say you want to save $1 million dollars by age
67. It is certainly doable, but a lot depends on when
Start at age 37, and you're putting away $546
a month to reach your goal.
Begin at age 47, and you'd have to put away
$1,497 a month.
Wait until age 57, and you're putting away a
hefty $5,168 a month.
Wait age 62 and you'd have to stash $13,258
a month to reach $1 million by age 67.
Divorce and poverty
Sadly, divorced people are much more likely to be
poor in their 60s and beyond. Research from the
National Center for Family & Marriage
Research shows the poverty rate is very low for
married folks over age 62 who never divorced. In fact,
only 3.4% of this group are considered poor.
Meanwhile, 16% of single people divorced before age
50 are considered poor, and 19% of single people
divorced after 50 are considered poor. That’s 1 in 5!
But it gets worse for women:
The poverty rate for single men divorced after
age 50 is 11.4%
The poverty rate for single women divorced
after age 50 is a whopping 27%
What to do
If you're going through a divorce, here are three
things to do:
Find a good lawyer. Ask people that you know,
do your Google research and interview lawyers.
It’s a tedious task, but an important one that is often
overlooked. Be skeptical of flat-fee relationships,
because often times they don’t work, especially in
fairly complicated divorces. And remember, your
lawyer is not your therapist; they are your legal
Watch your cash flow. You should pay careful
attention to the type of assets you receive in a divorce
settlement, because many of the “assets” are illiquid
and can be difficult to quickly turn into cash. So while
the spreadsheet might show an equal split, you need
to consider whether your half suits your needs,
especially with respect to current cash flow.
Consider taxes. Consider the effect of redeeming
retirement accounts in a divorce settlement. And
know that the $50,000 in a brokerage account might
be “worth” more than $50,000 in a tax-deferred
retirement account. This is because you’ll pay tax on
capital gains and dividends from the brokerage
account whereas you have to pay income tax (and
maybe penalties) on withdrawals from a tax-deferred
Then there are tax implications for spousal support
(alimony). Payment of spousal support is tax
deductible whereas receipt of spousal support is
taxed as ordinary income.
Important Disclosure Information
This information is intended to provide general advice We do not provide legal advice and you are encouraged to speak with your personal attorney prior to making decisions as it pertains to guardianship of older adults.
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