“Gray divorce” — the term for couples splitting up after age 65 — is climbing, and it’s wreaking havoc on retirement plans that were decades in the making.
According to the latest annual retirement survey from the Allianz Center for the Future of Retirement, 56% of married Americans believe a divorce would derail their financial retirement strategy.
This isn’t just hypothetical worry. Among those who’ve already been through divorce, 34% say the split set their retirement plans back, according to the study.
And 54% of divorced Americans report having substantially more financial responsibilities after their marriage ended, while 41% feel more stressed about their finances since the split.
The Allianz Center for the Future of Retirement polled 1,000 U.S. respondents aged 25 and older for the survey.
The unique challenges of splitting up later in life
Divorcing near or after retirement creates problems younger divorcees don’t face. One of the biggest is that there’s less time to rebuild. When you’ve been planning for retirement as a couple, suddenly funding two separate retirements can drain accounts faster than anticipated.
“Those going through ‘gray divorce’ don’t have the time to rebuild retirement savings on their own,” says Kelly LaVigne, vice president of consumer insights at Allianz Life. “Trying to fund two separate lives, instead of a joint one, can deplete retirement accounts faster than anticipated.”
The generational divide is striking.
According to the survey, 52% of married Generation X respondents and 63% of married millennials say divorce would derail their retirement strategy, but only 35% of married boomers share that concern. Yet boomers are most likely to face this challenge right now.
There may be a silver lining in all this, however: 44% of divorced Americans say they’ve put more thought into their retirement planning because of their divorce. Sometimes the end of a marriage forces people to take control of their financial future in ways they hadn’t before.
Protecting your golden years
The reality is that no one wants to plan for divorce, but ignoring the possibility could leave you vulnerable.
One in three married Americans worry about not having a financial plan if they get divorced in the future.
“It may sound cold hearted, but it’s important to consider how a divorce would affect your financial future,” LaVigne says.
For those approaching retirement, this might mean having honest conversations about individual retirement accounts, understanding how Social Security benefits work after a divorce, or exploring additional financial management strategies. Some may need to delay retirement to accumulate more savings.
While the national divorce rate has declined slightly overall, the increase in later-life separations suggests more Americans need to think about how a split could affect their retirement. Having a plan beats being caught off guard when retirement savings suddenly need to stretch across two households instead of one.
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