Divorce can dramatically disrupt even the most carefully crafted retirement plans, often causing financial challenges for divorced baby boomers during their retirement years. Studies indicate that those who have gone through a divorce typically have lower income and savings compared to their married peers. A decade ago, Libby Mintzer imagined her retirement in a gated community in Florida, indulging in yoga sessions and watching sunsets with her spouse.
Now 73, she resides alone in Tampa, earning a monthly income of just $1,600. The divorce stripped her of her assets, including her home and joint investments, as well as spousal support. Furthermore, she had depleted her savings to support her then-husband’s entrepreneurial pursuits.
With an investment of $200,000, Mintzer bought and furnished a one-bedroom apartment but is now grappling with escalating living expenses. Although she has sought part-time employment, she has maxed out her credit cards to afford her groceries. Her current financial situation is a far cry from her time as the main breadwinner in a marriage where she earned a six-figure salary over a 30-year career as a paralegal.
Millions of Americans are navigating retirement, but for many baby boomers, monthly Social Security benefits fall short, contributing to a retirement crisis. Compounding their difficulties is the rising trend of divorces later in life. A study from 2022 revealed that the divorce rate for those aged 65 and older nearly tripled between 1990 and 2010.
Data from the Census Bureau shows that divorcees generally possess lower average 401(k) balances, have less savings, and face more restricted monthly retirement income than married individuals. This situation leaves retirees like Mintzer in a precarious financial position. “I cannot survive solely on Social Security,” she remarked.
“I have no funds to support myself.”
Retirement savings for most married couples are often intertwined, resulting in lower taxes and shared living expenses. However, divorce breaks this connection, frequently leaving each individual with considerably less financial resources.
The Financial Impact of Divorce on Retirees
Even with a general decline in divorce rates, the effects on retirement assets remain significant. Retirees who are married typically hold over $100,000 more in their 401(k) and savings accounts compared to those who are divorced. Melody Evans, a wealth management advisor at TIAA, points out that one way to safeguard assets during divorce is through prenuptial agreements. Nevertheless, such agreements usually do not encompass wealth accrued during the marriage.
She underscores the necessity for couples to be open about their financial situations and to grasp their joint assets. Wealth division and gaps in financial knowledge can yield serious repercussions. A married retiree averages an income of $2,577 per month, whereas a divorced retiree earns $1,940.
This is in contrast to $1,887 for individuals who have never wed, $2,381 for widowed individuals, and $2,476 for those who have remarried. Women are especially at risk, often facing asset and savings losses stemming from traditional gender roles and enduring economic disparities. The financial situations of retired women generally trail those of men.
Men’s average retirement income per month exceeds women’s by nearly $600, and they are more inclined to have substantial retirement account balances. Among retirees, men save an average of $318,727, while women save $239,706. The story of Kathryn Clark exemplifies this inequality.
Married at a young age and raising her sons in California’s Bay Area, Clark held various jobs and frequently served as the primary income provider for her household. After her divorce, she found herself with limited assets and struggled to support her children on a meager income. Now 80, she resides in low-income housing, relying solely on Social Security and facing challenges in affording basic necessities.
When her ex-husband passed away, she discovered that she could receive an additional $400 monthly from his Social Security contributions, having previously lived on less than $1,000 a month. Overall, divorced women, like Clark, tend to have lower retirement incomes compared to men and their married counterparts. Their financial hardships highlight the serious implications divorce can have on retirement security.
