Although the divorce rate has been going down across the country, among some age groups it is actually trending upwards. In fact, the divorce rate for Americans over the age of 50 has doubled since 1990. The impact that splitting up close to retirement can have on a couple’s combined finances can come as quite an unpleasant shock once the marital assets are divided.
In addition to the stress of financial risk late in life, separation can cause significant health risks. Older divorcées often have higher levels of depression after divorce than those whose spouses passed away. Their resting blood pressure is higher, and weight gain, especially in men, is common.
What is the financial cost?
Because a married couple pools assets such as equity on the family home, business, IRA or 401K accounts, life insurance policies, stocks and bonds, the spouses can expect that their individual assets will drop by as much as 50% after divorce.
As New Jersey is an equitable division state, the court will determine the fair distribution of both assets and debt, taking into account each spouse’s relative wealth and earning capacity, standard of living, age and health, duration of the marriage and any pre- or postnuptial agreements.
Overall, the standard of living of older ex-spouses drops by an average of 21% for men and 45% for women. Women aged 63 and older who are divorced have a poverty rate that is 27% higher than any other group in that age bracket. And because older people are less likely to re-enter the work force in order to recover financially, they are more at risk of remaining economically insecure.
What about health insurance?
For a person who had been on their spouse’s health insurance during the marriage, divorce could mean that they no longer are insured unless there is an equitable solution for continuing coverage.
Older divorcing couples may also be wise to look at the financial cost of divorce in terms of maintenance expenses and health care. If one or both spouses worked at least ten years, they are eligible for Medicare and Social Security, and even a spouse who has not worked may be eligible for benefits based on the former spouse’s record, with conditions.
Divorce will not only be emotionally challenging but can also be very financially risky as couples age. It is important to examine all aspects of divorce with experienced legal counsel serving Monmouth County in order to find the best path forward.