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Gray divorce can affect retirement

Many people across the United States save up for their retirement with the goal of having a good life after leaving the workforce. However, life changes such as divorce may affect that goal. Between 1990 and 2010, gray divorces, or divorces between spouses 50 and older, doubled. In 2010 alone, one in four divorces were between baby boomers. Experts believe that the trend is caused by the increasing lifespan of Americans, among other factors.

Divorce has a financial impact. Although many older women, who have left the workforce and remain at home, may feel that they are the most affected by gray divorce, it can have a profound effect on men too. An older couple often saves retirement money and a pension without thinking that their marriage will end in divorce. Once the plan is divided between the spouses, the spouses will end with less than the retirement income they have projected. As a result, they may have to defer retirement to a later time and remain at work. Other than that, divorce can affect the retirement lifestyle. In the event of a divorce, since there are two households to support, there is less money to use for vacation and other expenses, such as medical bills.

Divorce should involve financial literacy. For people who decide to divorce at a later age, planning is crucial to having a better financial future. Experts believe that a gray divorce is permanent because of the shift in social norms; many people now understand that unsatisfactory marriage can end. Older people often acquired substantial portfolios of assets that can be a cause for dispute upon asset division.

It may be a good idea for divorcing spouses, at any age, to consult a financial and a legal professional. Each divorce case is unique and settling issues surrounding the end of the marriage can be complicated.

Source: USA Today, "Boomer divorce: A costly retirement roadblock," Rodney Brooks, Oct. 21, 2013

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Joseph J. Porzenski
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