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Divorce after 50? Can you afford it?

Gray divorce will become a well-know phrase in the coming years, because the baby boom generation is divorcing at a higher rate than previous generations. A study has found that during the last twenty years, the divorce rate double for older couples, and that in 2010, 25 percent of all divorces involved couples older than age 50.

The study suggests that this will have a significant economic impact on their retirements. Divorce for those older than age 50 will be different from divorcing at age 30. While child custody issues will be reduced or nonexistent, as the children have grown and left home, spousal support issues could become much more important, and will be critical for women who stayed home to raise children and have not been in the job market for 20 or more years, if ever.

Susan Brown, professor of sociology at Bowling Green State University and co-author of the report, notes, “Gray divorce can be economically devastating for some people, especially for women who have been out of the labor force bearing children.”

Two factors will complicate these gray divorces. If the couple does not have a retirement plan in place that they have contributed to over their working careers, they will have a greatly reduced amount of time to develop and fully fund an adequate retirement plan.

The other factor is two retirements are more expensive than one. It is estimated that it could cost 30 to 50 percent more to fund two separate households. This challenge is further complicated by the fall in many investment and retirement accounts during the Great Recession, leaving even those who planned well looking at a shortfall.

The housing market collapse during the same period also has made the financial position of many older couples much more tenuous. One financial planner stated, “Adapting to the changes a lot of times means scaling back.”