"And all the king’s horses, and all the king’s men ...Couldn’t put mommy and daddy back together again.” — "Starting Over Again," as performed by Dolly Parton
The prospect of living longer is impacting Americans in every aspect of our lives. We're eating better, exercising more, investing and paying off mortgages and debts. We're also getting divorced at record rates. The divorce rate among U.S. adults over 50 has doubled since the 1990s.
Many Boomers have sacrificed during their adult lives building careers and putting kids through college, often placing the needs and wants of others before their own. Now, looking at extended retirements, evidently some retirees desire a lifestyle that does not include their current spouse.
From a financial standpoint, “Gray Divorce” can significantly alter one's ability to capably finance a comfortable retirement lifestyle. The impact on women can be especially devastating. A majority of women still draw less, on average, in Social Security benefits than their male spouses. This is primarily because women often left the workplace periodically to raise children and didn’t enjoy the steady, incremental increases in their earning history that many men did.
According to AARP, in 2015, the average annual Social Security retirement benefit for women at age 66 was $14,184; for men at the same age it was $18,000. And women also usually live longer than men. The Social Security Administration states that "A man reaching age 65 today can expect to live, on average, until age 84.3. A woman turning age 65 today can expect to live, on average, until age 86.6." So divorcing women will have to live on less for a longer period of time.
And there are aging outliers. If you reach age 65, there’s a one-in-four chance that you will live past the age of 90. And there's a one-in-10 chance that you will live past 95. Even if you wait until age 70 in order to garner the highest Social Security benefit possible, you still may require the means to fund 25 years in retirement.
Many retirees considering divorce think they'll simply split their current income, and that their expenses will also be halved. This is not the case. Consider something as mundane as your utility bills. You'll be paying these monthly on your own, and the cost will be more than half of your previous bill. The same will apply to many other expenses.
Your living situation will be impacted. Even if you buy a house worth only half as much as the home you shared with your spouse, maintaining it will cost more than half as much. And what retiree desires to live in a place half as nice as the one they most recently called home?
Margaret R. McDowell, ChFC, AIF, author of the syndicated economic column "Arbor Outlook," is the founder of Arbor Wealth Management, LLC, (850-608-6121 — www.arborwealth.net), a “fee-only” registered investment advisory firm located near Sandestin.