This post is part of our series for advisors to pass to their clients. Aging doesn’t have to be scary, and we here at Ashar want to help you provide the resources that policy sellers need to flourish in this chapter of their life.
“I retired and realized that I didn’t want to spend 20 more years with her.”
“We have nothing to talk about now that our kids have left.”
“I’m financially stable enough not to have to stay in a bad marriage like my mother did.”
Gina and William are in their late 50s. They were high school sweethearts who got married shortly after graduation and now have three adult children. Like most couples, their wedding vows included “for richer and for poorer, in sickness and in health, until death do us part.” However, like many couples their age, the pair has decided to terminate their marriage in their twilight years.
Divorcing after 50, or “gray divorce” as it’s commonly called, has become extremely common: in 1990, less than one in 10 people who got divorced were over 50; now, that number has skyrocketed to one in four. Some experts point to the increased economic independence of women for this increase—they don’t have to stay trapped in bad marriages or risk poverty, unlike generations of women before them.
Modern technology and increased longevity also play a major part in the frequency of gray divorce. Sociologist Susan Brown pointed out, “When you retire and you no longer have any children at home and you're spending 24/7 with your spouse, if this is someone that you're not too fond of anymore, you might want to get divorced. You realize, hey, I could spend another 20, 25 years with this person."
Also, many Baby Boomers facing gray divorce are on their second or third marriages, which are less stable than first marriages. In fact, 53 percent of the people over 50 now getting divorced have done so at least once before.
However, these late-in-life divorces have major unexpected consequences on a senior’s financial status, and being unprepared can be devastating.
“Keep in mind that many consequences of divorcing later in life revolve around one fact: less time to recover financially, recoup losses, retire debt and ride the waves of booms and busts,” says Janice Green, author of Divorce After 50.
On average, older divorced people tend to have only a fifth of the accumulated wealth that older married couples or younger divorced people have. For this reason, singles will depend more on public benefits, like Social Security, Medicare, and Medicaid in their senior years.
Many rely on their spouses as first line of defense for health care, so divorcing can mean might higher costs of healthcare than you may have anticipated in middle age. This can disproportionately affect men, because 66 percent of caregivers are women. When you divorce, your healthcare costs are sure to rise. The average out-of-pocket cost for a live-in caregiver is $5,885 per year, and receiving help from a distance can average costs as high as $8,728 per year. Creating a plan for your senior care will alleviate some of the financial stress of this decision: will your children step up? Do you have enough saved?
Spending thousands of dollars on litigation can wipe out your retirement savings. If you’re desperate to leave a bad marriage or a messy split has drained your retirement savings, talk to your trusted financial planner to see if you can recoup your losses by selling your life insurance policy on the secondary life insurance market. Your life insurance policy is just as much an asset as a house or stock portfolio and can be liquidated when it becomes unnecessary.