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The Growing Problem of Divorce Late in Life and How It Impacts Finances

| January 14, 2020
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The Growing Problem of Divorce Late in Life and How IImpacts Finances 

The good news is divorce rates are down dramatically.  The bad news is that's because young people aren't getting married. 

We are seeing a large uptick in “gray divorces” or late-in-life divorces and have been studying the impacts on finances. 

There are some takeaways from a recent talk I went to by Lila Vasileff, who is a certified divorce financial advisor, among other things. 

Four elements predict divorce in general. 

  1. Criticism
  2. Contempt
  3. Being defensive
  4. Stonewalling

Discussion without humor, affection, and empathy also are good predictors. 

It was disturbing to learn that the average couple waits six years before seeking help for marital problems, yet fully one-half of all marriages end in the first seven years.  It seems like there's an opportunity there to maybe get with a counselor before things get really bad. 

Thirty years ago, around 1990, only one in ten people over age 50 were divorced. If you think about the older members of your family, it was relatively uncommon for grandmothers and grandfathers to get divorced.  However, ten years ago, fully one-quarter of people over 50 are divorced, and that seems to be getting worse. 

More than 55% of gray divorces occur with couples that have been married for 20 or more years. 

Today the baby boomers getting divorced want opportunities to become more fulfilled and higher standard relationships.  They're living longer, having declining disability rates, careers are going betterparticularly for women. Adding to this list, a lack communication around money issues doesn't help. 

There is a divorce echo effect.  Remarriages beget a higher likelihood of divorce. 

Forty-one percent of first marriages end in divorce, 60% of second marriages in divorce, and 73% of third marriages end in divorce. 

It's tough getting divorced late in life after saving for retirement for decades together. 

It's a concern on how the income and assets will be split, how an extra household would add cost to the finances, and it makes it harder to be able to retire. 

Furthermore, it's very difficult for a homemaker to transition back into the workforce if they've been out for many years.  This often results in depression or anxiety. 

Topics of divorce, from a financial perspective, include: 

  1. Retirement 
  2.  Coordinating social security benefits 
  3.  Income 
  4.  Spousal support and recent tax changes 
  5.  Division of assets 
  6. Insurance 
  7.  Adult children 
  8.  Long-term care 
  9. Competency 
  10. Estate planning

Retirement assets are a big deal to split up.  Taxes are important to consider.  Spousal support is less likely for a late-in-life divorce, and a lot of people that get divorced don't have good money habits or communication between the two of them, so there can be a lot of surprises. 

Another fact:  Compared to singles in America, married people accumulate about four times more savings and assets.  Those that divorce have a whopping 77% fewer assets than singles. 

This cold fact is why I like to say “Stay Married” after meetings.   

Older woman are particularly vulnerable.  Money issues are the number one worry.  Typically, there is a 45% decline in income, 32% of women feel that they are financially worse off than they expected to be, and 27% end up living in poverty. 

There are a lot of complicated financial decisions that have to be made when divorcing, and it is advisable to consider enlisting with a planner that specializes in divorce and a good divorce attorney. 

Thank you for taking a look, 

Tom 

 * Tom Gartner is not registered with Woodbury Financial Services, Inc. 

This article represents opinions of the authors and not those of Woodbury Financial Services, Inc. and are subject to change from time to time, and do not constitute a recommendation to purchase and sale any security nor to engage in any particular investment or legal strategy. The information contained here has been obtained from sources believed to be reliable but cannot be guaranteed for accuracy.    

 

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