Divorce after 50 can add to challenges for women
Even necessary change brings financial hardshipAugust 12th, 2021
Divorce is difficult for everyone going through it, yet it is a necessary change toward a healthy life for many women.
Divorce dramatically increased by 109% over the past 25 years among those aged 50 and older, according to Forbes.com. Many of those people were in a marriage for most of their adult lives. So why now, after age 50, is divorce on the rise? And why are so many women, in particular, asking out of their relationship?
The pandemic has created a reassessment for most of us, from how we spend our time and with whom we spend time. There have been dramatic changes people have been making for their careers, place of living, how they live, and their relationships.
As people live longer, they embrace new opportunities. Life has new chapters of health and opportunities, and especially women want to live life differently.
When their children start adulting by going away to college and being independent in their decisions, many parents have a shift in their sense of self-worth and purpose. Some couples no longer have much in common. What is keeping a couple together if they are not problem-solving parenting?
Women are earning more, making them more financially independent. Women no longer have to stay in a relationship for financial reasons.
Divorce is more accepted and not considered a character flaw in those that need to make a change.
Women, in particular, are exchanging financial security and lifestyle for happiness. Especially with the pandemic, women are reassessing what works and what they want in this next chapter of their lives.
Divorce after 50 can be financially devastating.
Often, women tell themselves they are too busy to deal with their financial lives, and they will get to it later. Too many times, later never comes. It isn’t until a dramatic change in circumstance occurs that many women realize they must deal with their financial lives.
The cost-of-living expenses when you’re single can be up to 50% higher than for couples, according to Investopedia.com. Especially now, when the cost of living is on the rise, living single is suddenly so much more than it was just a few years ago. It is not a matter of needing to buy new items; the cost of basic base expenses of food, energy, and health care has jumped in price. It can be shocking to discover that two people, many times, can live as cheaply as one.
When divorce occurs later in life, women have fewer earning years to recoup any financial losses, pay off debt, or recover from a stock market downturn. This lack of time to overcome adversity makes decisions while going through a divorce that much more critical.
Divorce creates additional costs in processing and legal fees. Usually, the more assets a couple has, the higher the fees during dissolution if it is contentious. The cost of a divorce is $15,000 or more per person, according to a Society of Actuaries 2019 essay.
The financial fallout is more significant for women when a divorce happens, because women usually live longer than men and have fewer earning years to build retirement benefits. Men typically earn more, especially when women stay home to raise children.
After a divorce, household income drops by 40% for women, but only 25% for men, according to the U.S. Government Accountability Office.
Many women who work outside the home take jobs that give the flexibility they need to balance their work-family life, and those jobs tend to be in industries like hospitality that tend to pay less.
Because of this combination of needing more resources in retirement and oftentimes having less saved for it, women must prioritize retirement, and their actions taken at this time in life will have a profound impact on their financial future and options.
Here are some actions that can be taken during divorce to help soften the financial blow:
•Strive for a more equitable split of the assets.
•When splitting the assets, make sure you’re not taking on all the taxable investments.
•Consider the impact before trading retirement assets for ownership of your home.
•Review and, if necessary, change the beneficiaries on your investments and life insurance, and update estate documents.
•Access Social Security divorced spousal benefits.
•Include health care expenses as part of the divorce settlement.
•Consider adding protected income sources to your portfolio to help create reliable income.
•If you still have dependents, come up with a payment structure to help minimize the negative impact on the children.
Change can often be challenging, and divorce certainly brings a lot of transformation to lifestyle and finances.
The high cost of going through a divorce for most ends up being worth the new freedom, and happiness comes with a fresh start.