At some point during your lifetime, you’ve likely heard the expression “half of all marriages end in divorce.” So, it may be surprising for you to learn that more and more spouses these days are choosing to stay together. Reportedly, the divorce rate in Minnesota and across the country is on the decline. For the Baby Boomer generation, however, data from the Pew Research Center suggests that the rate of divorce has skyrocketed.
In a phenomenon known as gray divorce, the divorce rate for American adults, ages 50 and older, has almost doubled since the 1990s. Going through a marital breakup at any age is hard. But if you’re going through a late-life or gray divorce, you’ll likely face some unique financial challenges. Here are some ways you can safeguard your retirement if you are facing a late-life divorce.
Understand your finances
In a divorce, it is crucial for you to gain a detailed understanding of your financial situation. In fact, some states usually require a statement of net worth or financial affidavit. This is especially important for women since, traditionally, husbands often managed most of the finances in a marriage. Knowing where you stand financially will facilitate a smoother transition to your new life ahead.
Social Security
In most gray divorces, Social Security will come into play. Keep in mind that, if you meet certain criteria, you may be able to receive Social Security from your former spouse. In order to qualify for this, you must be at least 62 years old, and your marriage must have lasted at least 10 years before your divorce. For more specifics, visit the Social Security Administration’s website.
Recovering losses
If you go through a late-life divorce, you will have less time to recover investment losses than younger people. Fortunately, Congress recently passed the Secure Act 2.0, which makes it easier to build up retirement savings plans at a later age. However, you will still need to contribute as much as possible to your retirement. Strive to live below your means after divorce in order to maximize retirement savings.
You are not alone
Although focusing on financial stability amid a gray divorce is important, your emotional and psychological well-being is just as important. Ending a decades-long marriage can be a big blow to your identity and self-worth. It is important to remember that you have a lot of life ahead of you, and starting over can be incredibly liberating. It is also comforting to know that there is professional assistance readily available to help you sort through legal issues as well as your future financial risks.
