CHARLOTTE, N.C. — Divorce rates are on the rise among older Americans. What factors are pushing this trend? And what could divorce after 50 mean for your retirement?
Chris Hobart, with Hobart Financial Group, says he recently that a generation ago, less than 10% of divorces happened in couples where one spouse was over the age of 50. But now, that number has risen to more than 25%.1 We’re also seeing more people decide to divorce after 20 or 30 years of marriage.
There’s even been a phrase coined for it: gray divorce. It applies to people who divorce in the second half of life.
How could a “gray divorce” financially impact non-celebrities, who may not have as many assets?
Hobart says, "No matter what your financial situation, a divorce impacts you in so many ways. For one, in households where both spouses earn incomes, a portion of the primary source of income is lost. Plus, if they live on their own after divorce, they now have to cover all of their expenses on their own… With NO ONE to help share that load. It’s interesting to me that financial issues are often a reason people get divorced. But they’re also why some couples choose to stay married, because they don’t think they can make it financially by themselves".
Hobart says a divorce later in life can impact your retirement plans.
Hobart says, "If we go back and think about the lost income, this means you likely have less to save for retirement…and…you may even have to spend some of your current savings on legal fees related to the divorce. Additionally, retirement savings accounts could be split as a result of a divorce order. It’s known as a QDRO – a qualified domestic relations order. With a QDRO, a judge says your former spouse is entitled to a portion of your retirement account, like a 401(k) or IRA".
Hobart says you also need to consider health insurance. If you’re on your spouse’s insurance and you haven’t turned 65 and become eligible for Medicare, you need to think through where your insurance will come from.
Also, Social Security benefits could be impacted. If you were married at least 10 years and over the age of 62, you could be entitled to spousal benefits, even after you’re no longer married.
But if you remarry, you could lose that benefit. Social Security is tricky for everyone and it gets even trickier after a divorce.
For anyone going through a divorce, Chris recommends a couple of things. First, gather all your financial documents, things like income tax returns, bank and investment account statements, insurance policies, etc. You’ll want to make sure you know where all your money is located and how much you have as a couple.
The second thing you’ll want to do is meet with a financial advisor to discuss all your options financially. They can walk you through the checklist of items you’ll need to think about, including retirement accounts, Social Security options, changing beneficiaries on policies, etc.
To learn more visit https://www.askhobart.com
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