How to stop a late-in-life divorce from ruining your retirement

When Margye Solomon decided to end her 33-year marriage last year, she knew her finances would take a big hit.

“I didn’t have enough money to retire before I got divorced, and I have less now,” said Solomon, who, at 71, still works full time as head of social enterprise and nonprofit partnerships at Ellevate, a global women’s network.

Dividing assets evenly with her ex, a retired lawyer, left her with half as much in savings — but, she said, “my happiness was worth more to me than the money.”

The 18 months since the split have been an exercise in frugality as Solomon rebuilds. To cut expenses, she moved from Nutley, N.J., to lower-cost Nashville, Tenn., where she rents a small apartment in a friend’s home, bought a used Nissan to get around and watches her spending.

“When you divorce at this age, you can’t be afraid to change your lifestyle,” Solomon said. “In what could be a 100-year life, I figure I have 20 to 30 years left, and I want to make the most of them.”

Solomon has plenty of company. While U.S. divorce rates have generally been falling, they have doubled for people over age 50 since the 1990s and tripled among those over 65, according to a 2022 study from Bowling Green State University in Ohio. Longer life expectancies and a rise in older women working, which makes divorce more feasible economically, are helping to drive the trend. Nearly 40% of divorces now involve someone who qualifies for AARP membership.

These couples may be happier after a divorce, but they have a lot to lose financially. Women can be hit especially hard: Wives who divorce after 50 see a 45% decline on average in their standard of living, versus a 21% drop for husbands of the same age.

And those losses can be persistent, a separate Bowling Green study found.

“Following these individuals for a decade after their divorce, we’re not seeing appreciable recovery,” said Susan Brown, a Bowling Green sociology professor who was one of the authors of the studies.

If you’re divorcing after 50, how can you better prepare financially?

“The key is coming to terms, both practically and emotionally, with the fact that your retirement is going to look different than what you thought it would be, and being willing to adjust,” said Chris Chen, a certified divorce financial analyst in Newton, Mass.

These moves can help.

Reaching a fair settlement lays the groundwork for financial recovery after a later-in-life divorce. For that, you first need a handle on the income, assets and household expenses you’re working with — an exercise that can be challenging, particularly if one partner solely managed the finances.

“It can feel like the numbers are judging you,” said Stephanie McCullough, a certified financial planner in Berwyn, Pa. “But it’s to both parties’ benefit to be as complete as possible, to see what will be realistic.”

For Nancy Howell, 60, a former elementary school teacher who left money management mostly to her husband during their 37-year marriage, this financial fact-finding exercise felt like “a gut punch,” she said, as she learned that her name wasn’t on the mortgage and some other accounts.

Howell, who divorced last year, kept her five-bedroom house in Tempe, Ariz., and got spousal support to help maintain it. But once her former husband retires this month and the support payments stop, Howell, who works part time as a substitute and after-school teacher, will have to tap into her retirement savings to afford the upkeep on the house.

“In retrospect, keeping the house was a really bad call, given that it’s just me and the dog now,” said Howell, who has three adult children. “I would have more financial flexibility and confidence if I downsized.”

One spouse keeping the house is common, experts said. But it’s often a financial mistake, especially if the children are grown.

That’s because you typically have to trade a portion of retirement savings to buy out the other spouse at a time when you’re close to winding down a career or may already have retired, said Lili Vasileff, a certified divorce financial analyst in Greenwich, Conn. The most pressing financial need after a split is typically cash flow, so tying up funds in an illiquid asset isn’t helpful.

“I ask clients, ‘If the house will eat up 70 percent of your income, are you willing to sacrifice 70 percent of everything else in your budget to keep it?’” Vasileff said.

Where you live plays a critical role in how retirement plans such as individual retirement accounts, pensions and 401(k)s are divided. In the country’s nine community property states — including Arizona, California and Texas — retirement assets acquired during the marriage will be split evenly. Elsewhere, state guidelines suggest a fair distribution based on factors such as the length of the marriage and each spouse’s financial situation.

State law also usually provides a formula for whether spousal support should be awarded, taking into account the length of the marriage and how much time a lower-earning or stay-at-home spouse needs to become self-supporting. An important additional factor for older couples: how long the higher earner has until retirement, when support typically ends, no matter how long the couple was married.

“That’s a rude awakening for many older people, primarily women, who end up with fewer years of support than expected,” Vasileff said.

You’re not obligated to follow the state guidelines. Everything is negotiable.

You can also negotiate matters that aren’t covered by state law, such as compensating a lower-earning partner for the loss of future Social Security benefits or health insurance. By federal law, a divorced spouse is typically entitled to up to half of her former partner’s benefit at full retirement, as long as they were married for at least 10 consecutive years; half of his benefit would be greater than what she would qualify for on her own; and she has not remarried. But that’s far less than what she would have access to if she were still married: her spouse’s full benefit, as well as her own.

“That’s a real whammy for women, who are more often the lower-earning spouse,” said Nancy Hetrick, a certified divorce financial analyst in Phoenix.

You can seek a larger share of a retirement account or other assets to help offset the impact of reduced Social Security benefits. But that strategy has the best chance of success, Hetrick said, if you opt for a mediated or collaborative divorce.

Jeff Fleisher, 69, has learned this lesson the hard way. A retired information technology director from Windsor, Calif., Fleisher and his wife of 29 years divorced this year, but they haven’t finalized a financial agreement. The assets still being negotiated: an inherited IRA and other investments that Fleisher said were separate property he acquired before the marriage. His legal fees have exceeded $50,000 so far, he said.

“Lawyers are not the panacea. They’re there to make money,” Fleisher said. “My advice is: If there’s any way to just work out a deal with your ex, do it.”

To manage the financial hit of a later-in-life divorce, you basically have two choices, Hetrick said: “Redo your retirement plans considerably and scale back on some things you thought you’d do, or figure out how to make more money — or both.”

If you have a job, you can make up ground by postponing your retirement. “Working even for a couple of years more can make miracles happen financially,” Chen said.

Already retired? Ageism or health troubles may preclude a return to work full time, but even a part-time gig can help.

You might also consider putting some settlement money toward professional development, which can help you earn more to pad savings.

That’s what Gillian Overton, 65, has done in the 10 years since her divorce. A former high school teacher, Overton used part of her settlement — she received half of her former husband’s pension as well as spousal support until he retired 18 months ago — to retrain as a therapist, which she hopes will allow her to extend her career.

Overton, who moved to her native Britain a few years ago from Far Hills, N.J., has lived comfortably since the divorce. But she is worried now that alimony has ended. “I feel like I’m looking into the abyss, wondering if my money will last,” she said. “It’s scary doing this on your own.”

Still, she said, she’s satisfied with the path she’s chosen, and experts say that’s a sentiment they often hear from clients who divorce in their later years.

“The process is not just about rebuilding your nest egg,” McCullough said. “It’s about rebuilding your life in a way that’s more deeply satisfying for you.”