This article looks at how people going through a gray divorce can protect their retirement funds.
The divorce rate in the United States has been falling for the past two decades, except for one important group: Baby Boomers. As Reuters reports, Americans aged 50 and over have seen their divorce rate double since 1990. The reasons why include grown up children moving out of the home and longer life expectancies making divorce later in life more of a possibility than it was in the past. However, while so-called gray divorce is easier nowadays, it is still beset by challenges, especially when it comes to retirement planning. Below is a look at how gray divorce affects retirement and what people can do to prepare themselves.
Gray divorce and retirement
For people who are planning on retiring soon, divorce has the potential to cause some major problems with those plans. As Forbes reports, it is not uncommon for people who have gone through a gray divorce to struggle during their retirement, especially women who are more likely to have less saved up and to have longer retirements than men. During a gray divorce it is common for one spouse to have been in control of the finances during the marriage, leaving the other spouse unaware of his or her financial situation.
Another problem is that gray divorcees have little time to rebuild their retirement funds. If a divorce turns out to be particularly costly then it is possible that retirement will have to be delayed. If one spouse has been a stay-at-home parent and never worked before, then trying to rebuild his or her finances later in life can be especially challenging.
Options for gray divorcees
The challenges that gray divorcees face should not be underestimated. At the same time, however, it is possible to deal with them effectively and enjoy a comfortable retirement. The first step is to gain an understanding of one's financial situation and take control of it. Anybody going through a gray divorce should have a budget prepared so that they will know what their income and expenses look like and how much they will need in order to have the retirement they planned on. Cancelling joint accounts and credit cards is also another important early step towards creating financial independence.
One advantage that gray divorcees do have is that child support is often not a consideration. However, Social Security benefits and pensions usually are on the table. Such benefits can typically be split with an ex-spouse, regardless of whose name they are actually in. Also, the marital home can be a difficult asset to handle, with many gray divorcees insisting on holding on to the home for sentimental rather than practical reasons. The truth is that maintaining a large home on a single income is usually very difficult and downsizing is often the more prudent option.
Help during divorce
Anybody who is going through a divorce, regardless of whether they are young or old, should contact a family law attorney for help. An experienced attorney will be able to advocate for their client's best interests, including helping them negotiate a divorce settlement that will better protect their funds for retirement.