When Boomers Divorce, Retirement Suffers

Baby Boomers are divorcing at a surprising rate, and that will have huge implications for their lives in retirement.

The number of divorces among people 50 or older doubled from 1990 to 2010. And in that year, one in four U.S. divorces was in that age group.

And while the experts say it's a product of, among other things, longer life spans, Boomer divorce will affect retirement lifestyles.

"Gray divorce can be economically devastating for some people, especially for women who have been out of the labor force bearing children," says Susan Brown, professor of sociology at Bowling Green State University and co-author of the 2012 report "The Gray Divorce Revolution."

But it's a problem for everyone involved. Here's why.

That pool of money that was going to fund retirement for a couple will now be split in half, and must now fund retirement for two people living separately. That costs a lot more. And that means people must either temper those retirement lifestyle expectations or delay retirement.

"You have the same pool of assets that has to sustain two sets of retirement," says Joe Sicchitano, senior vice president and head of financial planning at SunTrust Bank. "It can undermine good planning. You can have a well thought-out plan, and it will be undercut by divorce."

The biggest problems, planners say, is that it costs considerably more to retire as two single people than as a couple. Jason Wheeler, CEO of Pathfinder Wealth Management in Wilmington, Del., says it will cost 30% more. Joe Duran, financial planner and author of The Money Code, says it will cost at least 50% more to retire for Boomers who divorce.

"That means you will have to delay retirement or save a lot more in these last few years," Wheeler says. "Or reduce your lifestyle. Often that is hardest for people.

"If they are planning on retirement at 65, and they are 60, it may push them back to 67 or 68," he says. "And those are the ones who have done (financial) planning. Those that didn't are even worse."

Post-divorce, you take separate vacations; you have two cars instead of one; and you make twice as many trips to see the kids, Duran says. And costs may be even higher if you consider medical expenses, he says: If one person gets sick, the former spouse is no longer there to help take care of you.

"These are people getting towards the end of the careers in the labor market," says Bowling Green's Brown. "In your 20s or 30s you've still got time in your employment to make up for that loss. People 55 or 60 are so close to retirement, there's only so much time for them to make up the economic losses."

Some recommendations from financial planners to help steer through divorce in the later years:

•Hire a financial adviser when you hire a divorce lawyer. Let them work together on a settlement that well help you ease into retirement. "One of the things they do is, they get divorced before they do any retirement planning at all," says Wheeler. "That is one of worst mistakes they can make."

•Don't give up; there is still time to save. "Even if you divorce in your 50s, you have 30 years to rebuild your savings and investment," says Kelvin Boston, host of Moneywise on PBS. "You can rebuild your savings, rebuild your credit report, but it will take some time."

You have three choices, Duran says. Increase your savings and go back to work. Reduce your spending, and agree you both will live in smaller homes, travel less and eat out less. Or third, agree you are going to leave the kids less money.

•Don't try to support your adult children. "People get divorced and still want to help the kids or parents, and it's usually not possible," Wheeler says.

"Kids, even adult children, 30 or 40 years old, still expect Mom to pay for a $30,000 wedding. Kids can't ask parents for as much money."

•Watch the lawyers' fees. Legal fees come out of the retirement pie pre-divorce, reducing what you will have to live on. And if there is a divorce after retirement, those costs are virtually impossible to replace.

"You're planning for a different lifestyle, no matter what, because things have changed," says Grant Connes, co-managing director of Global Wealth Management in Fort Lauderdale. "Adapting to the changes a lot of times means scaling back."

Duran says we should expect the divorce rate to go up among Boomers because now that people are living longer, they are having a second midlife crisis.

"It's the second wave of midlife crises," he says, "a late-stage midlife crises."

"Gray divorce reflects changing attitudes about marriage," Brown says. "We have much higher expectations today for what constitutes a successful marriage than earlier generations did. At the same time, society is more accepting of divorce as a solution to an unsatisfying marriage. For these reasons, gray divorce is probably here to stay."

At the end of the day it's just having a proper plan," Connes says. "Divorce is an unexpected roadblock. It's just about how you adapt to that.

"At the end of the day, that's what you have. And it's not easy on anybody."