It seems that “happily ever after” is becoming increasingly harder to achieve for couples entering their golden years.
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Divorce rates doubled among adults ages 50 and older from 1990 to 2009, according to The Gray Divorce Revolution study conducted by Bowling Green State University. In 2009 alone, approximately 1 in 4 divorces in the U.S. involved couples over 50. And for boomers that don’t have their finances squared away properly, splitting money and property can create an economic disaster for both parties.
People choosing to get married later in life is one of the reasons for the increase in boomer divorces, says Nancy Chemtob, founding Partner at Chemtob Moss Forman & Talbert, a matrimonial and family law practice in New York. “If they are marrying at 35 and divorcing once the kids are almost out of the house, that means a divorce at 50. When people were getting married in their 20s, it used to mean a divorce at 35 or 40.”
Chemtob also points to the rise in prenuptial agreements and the accessibility of online dating sites and social media sites as driving divorce rates up among older couples.
“Today we’re seeing that people have more prenups than ever before, and people are treating a marriage more like a business deal. When they’re ready, they just cash out,” Chemtob says. “With the Internet, as soon as they get bored or want to see what else is out there, it’s just a couple of clicks away. It’s become easier than ever to see if your high school boyfriend is single again.”
In any divorce--no matter the couple’s ages-- Chemtob says that the two main factors are money and kids. Older divorcing couples tend to avoid child custody disputes because their children are either grown, or old enough to voice who they want to live with.
However, boomer couples are often married for a longer period of time, making financial matters much more complex.
“You’ve often got real estate, a 401(k), an IRA, perhaps a business started during the marriage, and more,” says Chemtob. “Sorting it out and ensuring that both parties are set up equally for retirement can be difficult.”
In addition to the hassle and uncertainty of dividing assets, Chemtob says the divorce itself can be incredibly costly for a couple with many anniversaries behind them. Depending on the complexities of a couple’s finances and their willingness to compromise, she says divorces can range in price from $3,500 to around $2 million by the time all is said and done.
To save time, headaches and legal fees, couples should try to agree on a financial split as soon as possible, says Lori Roth, a CPA and divorce mediator for Metis Group LLC based in New York.
“Once you can agree on the financial side, 99% of the time, the rest falls into place. Money is the thing that people fight about and are scared about, but then they end up spending down a lot of the money they’re fighting over,” Roth says.
Before any fighting begins, Roth says the first step divorcing couples should take is to create a budget. Most couples have never put pen to paper to see exactly what is spent in a year on everything from haircuts to birthday presents, but it has to be calculated.
Once both parties draw up their annual budgets, all assets including 401(k)s, IRAs and stock portfolios must be reviewed. These assets can be split down the middle with little to no financial penalty, but legally, only an attorney is qualified to handle those arrangements, Roth says.
“You can’t have a divorce where one person gets the house and nothing else. You have to make sure everyone has some liquid assets and some retirement money. Unless you hire an attorney to split your financial or retirement accounts, it doesn’t always work out,” she says.
Both parties need to maintain a long-term perspective when going through the divorce process, advises Scott Halliwell, a certified financial planner at USAA.
“It may not seem like a big deal now to give up ‘X’ or let your spouse have ‘Y,’ but what does it mean for you 20 years from now? A 50/50 split may not leave you with enough for retirement, and you need to know where you guard rails are and what you can give and what you can’t give,” says Halliwell.
The unfortunate reality for people getting divorced later in life is that they have limited time left before retirement. Most boomers have not saved enough to run one household on a fixed income, and supporting two can be a frightening proposition.
“Emotions are going to be high, but everything varies by situation,” he says. “Depending on assets, future income stream, and the talent of your divorce attorneys, no two situations ever come out the same, so it’s important you go into it objectively.”
Roth adds that older couples deciding to part ways have one big advantage over younger ones: they’ve worked through a lot of problems together, and sometimes that perspective has resulted in a surprising outcome.
“I’ve seen a few couples stay together once they started the divorce process,” she says. “Once they found a way to start listening to one another and thinking about the other person’s feelings and priorities, they were able to find a solution to why they were unhappy in the first place.”