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Financial pitfalls for older adults in a divorce

On Behalf of | Jul 24, 2019 | Divorce

When spouses over age 50 get a divorce in Minnesota, they may face additional financial and emotional struggles. Since 1990, the divorce rate for this age group has doubled. Thus, more and more people are being forced to recover from a so-called “gray divorce.”

For some older exes, there is simply not enough time in life to make up for the financial impact of divorce. According to one study, many people are still recovering a decade after their separations. Women may be particularly hard hit, struggling to get back into the workforce if they took time to raise children. One study found that the standard of living for women drops 45% after a gray divorce compared to a 21% drop for men.

Some other studies have looked at the effects of divorce on a person’s career. Researchers have found that work performance also tends to suffer during a divorce. However, some CEOs at large companies may actually benefit financially. Studies have found that companies will often raise a divorced CEO’s salary or bonuses, possibly to help offset the financial effects of the split.

These financial problems are not inevitable. A spouse who is considering a divorce might want to strategize with an attorney about how property could be divided in a way that would leave them more financially secure. One common mistake is keeping the family home without first making sure it is affordable on one income. Another frequent error is in failing to account for how the value of some retirement accounts could be reduced after paying taxes and penalties for withdrawals.

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