This “grey divorce” trend has far-reaching implications, including impacts on retirement plans, a new survey by Allianz Life Insurance Company finds.
Divorce rates among middle-aged and older Americans are on the rise, according to a 2022 academic study. The study, published in “The Journals of Gerontology,” found that between 1970 and 2019, the “grey divorce” rate more than doubled among those 50 and up, from five divorcing persons per 1,000 to ten divorcing persons per 1,000.
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According to Allianz, 56% of married Americans say that a divorce would derail their retirement strategy. Millennials, in particular, are worried about the ways a divorce could impact their savings goals, with 63% saying it would affect their ability to retire. This is compared with 52% of Gen Xers who report that a grey divorce would impact their retirement plans, and just 35% of boomers.
“No one wants to prepare for a divorce,” Allianz Life Vice President of Consumer Insights Kelly LaVigne said in the report. “But divorce later in life – especially after retiring – is increasingly common. If you have been planning for retirement as a couple, then splitting up your assets to fund separate retirements can leave you short of achieving your retirement goals.”
Among those who have already gone through a divorce, 40% of Americans say it derailed their retirement plans entirely, and 34% say it set them back significantly.
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“It may sound cold hearted, but it’s important to consider how a divorce would affect your financial future,” LaVigne says. “Those going through ‘gray divorce’ don’t have the time to rebuild retirement savings on their own. Trying to fund two separate lives, instead of a joint one, can deplete retirement accounts faster than anticipated. They may need to delay their retirement to accumulate more savings and consider additional risk management strategies to ensure their funds can last their lifetime.”
One in three respondents told Allianz that they don’t have a financial plan if they were to get divorced. This is creating a lot of worry, especially for millennials and Gen Xers.
There is certainly some basis for that worry. About 54% of Americans say that they’d have substantially more financial responsibility if they were to get divorced than they do currently. How to split bills and financial obligations as a couple has long been a hot-button issue, and one that many people approach differently.
Among already divorced respondents, 41% say they feel more stressed about their financial situation post-divorce, both as it relates to retirement and otherwise, than they did previously.
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This article The Impact Of ‘Grey Divorce’: 40% Of Americans Say Later-In-Life Splits Derailed Their Retirement Plans originally appeared on Benzinga.com
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