Will you still feed me, will you still need me when I’m sixty-four? The Beatles tune “When I’m sixty-four”, recorded in 1966, foreshadowed a growing trend of marital instability among Baby Boomers in the United States.
Wikipedia defines “gray divorce” as the demographic trend of an increasing divorce rate for older couples in long-lasting marriages”. Gray divorce is on the rise. Among United States adults 50 and older, the divorce rate has nearly doubled, according to a 2015 Pew Research Center report. Furthermore, the research shows that the divorce rate for adults age 50 and over in remarriages is double the rate of adults 50 and over who have only been married once. The climbing divorce rate for adults ages 50 and older is linked in part to the aging Baby Boomers, who now make up the bulk of this age group (age 51-69). The research indicates that many individuals in long term marriages have become unsatisfied with their marriages over the years, and seek opportunities to pursue their own interests and independence for the next chapter of their lives.
Separation and divorce on the brink of retirement can be financially devastating. Older divorced adults feel less financially secure than older married or widowed adults, particularly among women. Lifetime or long-term alimony is no longer guaranteed in Pennsylvania. The financially dependent spouse may find it difficult having to sell the marital residence and adjust to a change in lifestyle during the next stage of life. The higher-earning spouse is faced with the realization that there may not be enough years to recover funds transferred to the financially dependent spouse. Even if both parties have worked, there is usually an imbalance of assets among them. Women, in particular, have taken time off from careers for family reasons, which has resulted in reduced retirement assets and social security income they may have received at maximum retirement age. If the marriage lasts under 10 years, the dependent spouse may not be entitled to up to one-half social security benefits of the other spouse if he/she does not have a long work history.
Older people may have limited or no job security, and have serious concerns about re-entering the work force. It is extremely difficult to go back to school or change careers over the age of 50. Self-employed or small business owners may not have sufficient money saved for retirement, or may receive minimal social security benefits if they have not contributed as much as a salaried employee.
The empty nester couple may have just finished putting children through college, and recently depleted retirement assets to avoid co-signing student loans. They may also be faced with providing economic support to aging parents or adult children with special needs.
Finances are even more complex when splitting up a household for the second or third time around. There may be more than one set of children competing for financial resources. A higher earning spouse in a second marriage may have to postpone retirement to meet support obligations for unemancipated children.
Long term care is an issue because people are living longer. If a spouse or children are not available to provide direct care or support for long term services, the cost of long term care insurance should be considered when budgeting for retirement.
In addition to the financial consequences of gray divorce, there are significant health concerns, including interruption of health insurance coverage, depression, chronic illness, and in some cases, mental or physical incapacity.
It is extremely important for older individuals experiencing separation and divorce to consult with a financial advisor to create a financial plan for retirement, and with an attorney about executing a new Will, Power of Attorney and Medical Directive.