Divorcing after the age of 50 has become so common, it has a name: gray divorce. Thanks to longer life expectancies and modern medicine, people in California who are considering divorce during this time in their lives may still have decades left in which to try new things, meet new people and develop new relationships. However, the impact of the divorce on their finances may affect their ability to get the most of this time in their lives.
Bloomberg warns that gray divorce can destroy financial stability, although for many, the tradeoff to become happily single is worth it.
It does not appear to make a difference what field people work in. When they divorce, it can affect their success at work. For example, researchers indicate that people in management may underperform by over 4% during the first six months after the divorce, and the split can continue to affect their success for two years.
Standard of living
Naturally, going from two incomes to one will change a person’s financial outlook. Researchers discovered that for women over age 50, the standard of living after divorce may decline by 45%. For men in that age group, the drop is less than half, at 21%. Often, there are not enough years between the divorce and retirement for people to recover from the split, and many people never fully reach the same lifestyle that they enjoyed as a married couple.
U.S. News & World Report warns that even though it may be tempting to use retirement funds to cover some of the costs of divorcing and getting set up in a new life, it is much better to safeguard the investments for the future. Generally, these can be rolled over into an IRA or some other type of savings without penalty, depending on the type of account.