Divorce after 50: Preserving financial stability for New Yorkers

Divorce creates a financial hardship at any age, but it may be particularly difficult for people going through a split in their later years.

The end of a marriage is an emotionally devastating time, of course, but it also has serious financial repercussions for many people. For those older than 50 living in New York, recent studies suggest that money matters could be especially difficult following a divorce.

Being prepared is key to preserving a financial future. So is knowing the potential pitfalls that may lie ahead.

The research

In 2013, a study from the Bowling Green State University focused specifically on divorce among older Americans. It concluded that between 1990 and 2010, the divorce rate in those 50 or older doubled. Researchers also discovered the following:

  • People who were remarried were more likely to get divorced.
  • The divorce rate for people older than 65 more than doubled.
  • A shift in attitudes toward marriage could account in part for the increase.

Thus, it is timely to talk about the ways that the end of a marriage could create a financial burden on the people going through the process.

Financial implications

There are several important factors that distinguish a divorce later in life, at least in terms of finances. First, people later in life tend to have more assets. Secondly, they are closer to retirement age and therefore are closer to depending on those assets. Essentially, these couples have less time to recoup their losses, as their years left in the workforce may be numbered.

There are several ways to combat this. First, anyone who has a retirement account such as a 401(k) or 403(b) should research "catch-up" laws. According to the Internal Revenue Service, account holders can make additional contributions up to a certain limit.

It may also be prudent to sell the family home, as difficult as that decision may be. TIME Magazine reports that following a so-called "gray" divorce, men lose 23 percent of their household income, and women lose 41 percent. Selling the home and downsizing could put some extra cash in each person's pocket.

Being mindful of the division of assets is perhaps the most crucial step. Splitting retirement accounts fairly can be complicated, as is dividing a family business and valuing certain property. Working with forensic accountants and other professionals ensures that items distributed equitably.

Similarly, debt is also divided between spouses during a divorce. Instead of sharing several debts, it is often more prudent for each spouse to own a debt entirely. Otherwise, it is possible for one person to default on payments, adversely affecting the other person's credit. Any discrepancy in what is owed could be compensated for during the division of property.

No divorce should ever be taken lightly, especially one that happens later in life. Anyone who has questions about this topic should speak with a family law attorney in New York.