The Impact of Divorce on Women Over 50

By on May 17, 2017
The Impact of Divorce on Women Over 50

By Angie O’Leary –

In recent years, a new trend has emerged: the number of “gray divorces” has soared. For couples over age 50, the divorce rate has doubled in the last 20 years, from 10 percent to 25 percent, according to a recent study by the National Center for Marriage and Family Research. There are several reasons for this. Sometimes, after the children are raised and gone, the couple realizes that they have few common interests. Increased longevity suggests that a couple may spend 20 to 30 years in retirement, and they feel it is still worthwhile to make a change in their lives. In addition, the overall stigma of divorce has faded, making it generally more acceptable.

If you haven’t been the one handling the family checkbook, it is easy to feel overwhelmed. However, the sooner you get comfortable; the better off you will be overall. Here are some common questions that people going through divorce later in life should ask themselves:

How is a late-stage divorce different from a traditional divorce?

Children are usually grown, so there are typically no child custody issues or child support issues. But there are years of compounded assets, debts, incomes and expenses to untangle. The divorcees have less time to recover or replenish assets and retirement accounts, which are often divided in half.

Where do I stand in the division of property, assets, loans, and retirement savings?

After all assets, property, retirement accounts, and liabilities have been accounted for, there is likely to be a negotiation to divide things up in a fair and equitable way.

What about the house?

It is easy to be sentimental and want to keep the house, and you may be willing to give up other assets in order to keep it. Think long and hard about this: in addition to any outstanding mortgage payments, the property taxes and insurance rates will stay the same, even though only one of you still lives there. You will also be responsible for all maintenance duties and service costs.

The value of the house may not appreciate as quickly as other assets might, and has many non-discretionary expenses and responsibilities tied to it. When you compare this to a retirement plan that potentially grows with the market, over time it may be more advantageous to choose the retirement account instead of the house.

How about insurance policies?

Make sure there will be no health insurance coverage gaps throughout the process. If you are covered under your spouse’s policy, investigate your options. Are you able to continue it individually, and for how long? Will you need a new policy? Is there insurance available through your own employer? How much would an individual policy cost?

For life insurance policies, confirm beneficiary designations. Leaving an old spouse listed is commonplace, and the beneficiary listed on the form will trump anything listed in a will. Probably not the outcome you want!

If one divorced spouse is going to live alone or has no support for health or long term care needs, there should be a discussion about who will provide that care. Is long term care insurance an option, based on health? Is it affordable?

What usually happens when one spouse is the primary income earner?

Understanding the household financials provides a better grasp of family assets and debts, and helps in maintaining the budget. Once each spouse understands what their new financial responsibilities will be, it is easier to determine the income needs. The longer the couple has been married, the more likely that an alimony payment will be arranged. Since children are usually grown in a gray divorce, child support is not typically an issue.

How are taxes and social security benefits affected by a divorce?

When retirement age is reached, a person can claim spousal social security benefits based on the earnings record of an ex-spouse, provided the couple was married for at least 10 years. It is wise to consult a financial planner who understands the ins and outs of the system and who can help you maximize your benefits.

And, your tax filing status may change from married filing jointly to single or head of household, depending on the circumstances.

Are there financial consequences to getting married again?

It is important to re-establish your own financial position before entangling assets again with someone new. Besides that, if your assets were divided after a first marriage, and then have to be divided again after a second marriage, your assets could dwindle very quickly.

How do you deal with estates and wills and blended families if you get remarried?

In the event that you get married again, it may be worthwhile to work out a pre-nuptial agreement. Spend some time updating beneficiary designations on retirement accounts, insurance policies, and employee benefits. Any wills, trusts, powers of attorney, and living trusts will likely need to be redone.

If either spouse has children, care must be given to make sure that assets inherit and pass through to their intended beneficiaries.

Angie O’Leary is head of the investment solutions group for U.S. Bank’s Wealth Management and leads the bank’s retirement planning capabilities called RealSteps>Retirement.  Angie brings more than 25 years of financial industry experience to her clients. 

U.S. Bank and its representatives do not provide tax or legal advice. Each individual’s tax and financial situation is unique. Individuals should consult their tax and/or legal advisor for advice and information concerning their particular situation.

This information represents the opinion of U.S. Bank and is not intended to be a forecast of future events or a guarantee of future results.

About lb50

Leave a Reply

Your email address will not be published. Required fields are marked *

The Impact of Divorce on Women Over 50