Gray divorce rates on the rise
Recent study finds divorces for those over the age of fifty doubled in 2009. Financial experts note this requires careful consideration of retirement assets in divorce settlement plans.
March 13, 2013
A new report, titled "The Gray Divorce Revolution" recently released by sociology experts with Bowling Green State University, found divorce for those over the age of 50 is on the rise. The increase is significant, with separations in this group doubling from 1990 to 2010.One common concern is present for everyone within this group, regardless of the reason for the split: how will divorce later in life impact retirement?
Divorce at a later stage in life can have a negative impact on retirement savings because funds that were initially intended to support a couple are now split to support two individuals. Although there is no easy answer, careful planning can help ease the financial strain that is often connected with this transition.
Details of study
Researchers with the study reviewed data from the 2009 American Community Survey (ACS), a nationwide annual survey. They found that although the national divorce rate has remained fairly steady at almost 50 percent, the divorce rate within middle and older aged Americans doubled. Specifically, the study found 1 in 4 divorces during 2009 were within the baby boomer population with over 600,000 Americans over the age of 50 getting divorced in 2009 alone.
Researchers clarify the study did not find a definitive cause for the increase, but point to a higher population of second marriages in this age group as a likely factor. In 1980, less than 20 percent of marriages in this group were second marriages. This number increased by 10 percent in 2009. Scientists note that previous studies have shown the risk of divorce is 40 percent higher in second marriages than in first marriages.
The study also predicted that the divorce rate within this age group would continue to climb.
Later life divorce and retirement
Funding two retirements is more expensive than funding one. A recent report by USA Today interviewed various financial experts and found it would cost at least 50 percent more for couples to retire after a divorce. As a result, divorce settlements must be structured carefully.
Pension plans, social security and retirement accounts must all be considered. Cautious planning is required if the retirement accounts are split during the divorce settlement, since tax penalties may be applied. In most cases, this can be avoided with a Qualified Domestic Relations Order, or QDRO.
Determining the best divorce settlement for each individual situation can be difficult. Contact an experienced divorce settlement attorney to discuss your unique situation and better ensure you receive a fair agreement that meets your needs.
Article provided by Brodie & Friedman, P.A.
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