Are you facing a divorce late in life? According to new research, you’re not alone. The Pew Research Center recently found that divorce rates for people age 50 and older have doubled since 1990. Divorce rates among those over age 65 have tripled during that same period.1
There are a variety of reasons why couples are choosing to divorce as they approach retirement. Some couples may wait until their children are out of the house to separate. Longer life expectancy could play a role, too. Couples in their 50s and 60s could live another 30 to 40 years. Some couples may have diverging plans for how they want to spend those years.
Regardless of the reasons behind your divorce, it’s important that you understand the impact the divorce may have on your retirement. That’s especially true if you aren’t the breadwinner in the marriage. You may have lower income and fewer assets than your spouse. If you don’t have a plan in place, your divorce could leave you unprepared and make it difficult to achieve a stable and enjoyable retirement.
Understand your rights in a divorce.
Before you finalize your divorce, make sure you understand your rights with regard to your spouse’s retirement benefits and assets. For example, you may have a legal claim to a portion of his or her pension and 401(k) plan. He or she may have property or business assets that generate income, and you may be able to negotiate for a portion of those resources.
You also may be able to file for spousal Social Security benefits after you are divorced. Social Security sometimes allows individuals to file for spousal benefits even after a marriage is over. This could be a helpful option if you have limited career earnings compared with your spouse. A financial professional can help you better understand which benefits and resources may be available to fund your retirement.
Plan for medical and long-term care needs.
Whether married or divorced, many retirees face a unique set of risks. Perhaps one of the greatest threats to a comfortable retirement is the need for long-term care, which is extended assistance with basic living activities such as eating, bathing, mobility and more.
Long-term care can be costly, and it can be especially challenging for single retirees. You may not have a spouse or partner to help you, which could make you more dependent on paid services like in-home aides or assisted living facilities.
You may want to explore long-term care insurance, which is a type of insurance that pays for your long-term care costs should you ever need it. Long-term care insurance has an underwriting element. The older or unhealthier you are when you buy the insurance, the higher your premiums are likely to be. That means it may be helpful to consider long-term care insurance sooner rather than later.
Create a strong support system.
Divorce at any age can be difficult. However, it can be especially challenging as you approach retirement. There are the financial challenges that come with splitting your assets just before you are set to retire. But there are also the emotional and personal challenges that may come with embarking on your retirement alone.
You can manage these challenges and reduce their impact by creating a strong support network. Take this time to reconnect with friends and family members. Perhaps pursue a new hobby or interest through which you might meet new friends. Also, surround yourself with trusted advisers who can help you navigate difficult challenges. An experienced financial professional can help you develop a strategy and manage risks.
Ready to protect your retirement from the fallout of your divorce? Let’s talk about it. Contact us at Intelliplan Financial today. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.
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