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Divorce later in life brings unique financial challenges

Research in the past few years has dispelled a common misconception about American divorce rates. It was often said that nearly half of all marriages will end in divorce. In reality, that figure was too high, and overall divorce rates have actually been declining for several decades.

There is a notable exception among one demographic, however. In the past 20 years or so, divorce rates among Americans age 50 and older have risen considerably. So-called "gray divorce" is now a recognized phenomenon, and it comes with its own unique set of challenges.

Getting divorced later in life can be easier in some ways. Child custody may no longer be a factor, for instance. But gray divorce can be financially risky; especially when it comes to retirement savings. The older you are when you get divorced, the less time you have to replenish retirement accounts. You may also need to rethink your retirement expenses, considering that it is more difficult and more expensive to live on a single income.

There are some things you can do post-divorce to help rebuild your retirement savings. With many IRAs and 401(k) accounts, for instance, there are "catch-up rules" that allow people age 50 and older to contribute more per year than younger savers. Unfortunately, aggressive saving is not always an option for older individuals seeking divorce.

In most gray divorces, the number-one priority should be to ensure that both spouses are able to afford daily life while working and to eventually retire with as much of a financial cushion as possible. With this in mind, it is beneficial for both parties to be cooperative and willing to negotiate in order to keep divorce costs reasonable (instead of trying to "win" the divorce). At the same time, however, you should not be willing to take a bad deal simply to shorten divorce proceedings.

Perhaps the best thing you can do to safeguard your financial future is to work with an attorney who understands your goals and will work hard to help you reach them. Some careful planning and preparation now could allow you to divorce amicably and retire in relative comfort when the time comes.

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