Many Michigan residents have now heard about the phenomenon known as “gray divorce,” which refers to divorce among older adults. Previously, seniors did not file for divorce at high rates, and most divorces happened at least a bit earlier in life when the parties still had the opportunity to work enough time to earn sufficient income for retirement. In other words, when divorce primarily affected younger people, those individuals still had the opportunity to bounce back financially from the blows of a divorce. However, as more Baby Boomers are filing for divorce, new financial complications are arising. What else do you need to know about financial complications and gray divorce?
Divorce Rates Rising Among Older Adults
A report from the Pew Research Center indicated recently that divorce rates are climbing for the population of Americans aged 50 and older. At the same time, “divorce is becoming less common for younger adults.” To be sure, since the 1990s, the rate of divorce has approximately doubled among Baby Boomers. To give you some more detailed information, the Pew Research Center gathered data from the National Center for Health Statistics and the U.S. Census Bureau, from which it determined that, “in 2015, for every 1,000 married persons ages 50 and older, 10 divorced.” That number has increased from only five in 1990. And the numbers are even more startling for adults in higher age groups. Indeed, “among those ages 65 and older, the divorce rate has roughly tripled since 1990, reaching six people per 1,000 married persons in 2015.”
While it might not seem obvious initially, rising divorce rates among older adults pose particularly stark financial complications. First, adults who get divorced near or after retirement often have trouble bouncing back from the financial difficulties of divorce (namely, learning to live on one salary instead of two). Second, many seniors require additional financial resources to manage healthcare issues, and divorce can make it difficult to have any extra money. Moreover, retirement accounts typically are subject to division, meaning that retirement income from pensions or 401(k)s can end up being a lot less than anticipated prior to the divorce.
Dealing with Finances in a Gray Divorce
An article from AARP addresses the issue of how seniors might deal with finances in a later-life divorce. First, the article provides some relevant statistics:
- Average man’s income drops by 23 percent after a divorce;
- Average woman’s income declines by 41 percent after a divorce; and
- Divorce industry earned about $50 billion in 2010.
The key to a successful gray divorce-at least in terms of finances-is to have a budget, the article suggests. More importantly, seniors need to stick to those budgets. When developing a budget for life as a single, older adult, it is important to take into account the amount you will be receiving in retirement benefits, Social Security, and any other form of income. Then, you should be realistic about your monthly bills and how much you will need to spend. When you develop that budget, you also need to be realistic, acknowledging that divorce “will likely be financially leaner for you both,” according to the AARP article.
Contact a Michigan Divorce Lawyer