It is no secret that the Baby Boom generation is nearing retirement. It is no secret, either, that the divorce rate among Americans age 50 and over is on the rise. Between 1990 and 2010, the divorce rate doubled for that population; one in four Boomer marriages failed. Welcome to the phenomenon known as “gray divorce.”
The problem these couples face, of course, is in maintaining their lifestyle after divorce. Children may be grown, and their Lake County home mortgages may be paid off, but chances are good that they developed their retirement plans to support one household, not two.
Couples in earlier stages of their careers can recalculate their retirement needs after a divorce. They have decades to make up the difference. But husbands and wives who are just a few years away from retirement don’t have that luxury. Their retirements may be delayed a few years to give them some time to stuff more cash into their mattresses.
The delay is not the only challenge. Those retirement savings will have to support two households instead of one — especially if one spouse was not in the workforce full-time during the marriage. When the children were small, for example, one spouse may have stayed at home; perhaps it was less expensive than putting the kids in daycare. That meant, though, that only one spouse was saving for retirement.
With expenses doubled, divorcing Boomers may have to adjust their expectations about where they will live and what they will do in their retirements. Luxury retirement communities could be off the table, along with dream vacations and spoiling the grandkids.
Researchers have a few theories about why the divorce rate for Baby Boomers is up, and we’ll discuss those in our next post.
Source: USA Today, “Boomer divorce: A costly retirement roadblock,” Rodney Brooks, Feb. 25, 2013
Our firm works with divorcing couples who face sticky financial issues like the ones discussed above. You can learn more about our Libertyville, Illinois, practice at our website’s divorce mediation page.