It is becoming increasingly common for older couples to divorce as they are nearing or have already entered retirement. This is sometimes referred to as a “gray divorce.”
Couples that decide to get a divorce when they are older often have accumulated a significant number of assets. These assets, including retirement accounts, non-qualified brokerage accounts and real estate holdings, provide the foundation for the couple’s retirement.
When going through the asset-division process, each spouse will want to consider how the settlement will impact their retirement lifestyle. For a couple with $2 million in the bank, a 50% split that leaves each spouse with $1 million may sound like an adequate sum of money to get you through retirement. The reality is that it may not last as long as you think.
According to Go Banking Rates, $1 million will only last 18.5 years in retirement in New Jersey. This makes New Jersey the 10th most expensive state in the country. There were some other interesting pieces of data included in the survey.
- Hawaii is the most expensive state ($1 million lasts less than 12 years)
- New York is the fourth most expensive state (17 years, 1 month)
- The most affordable state is Mississippi (nearly 26.5 years)
The caveat is that these are conservative estimates. For couples that have a lot of assets, they typically have more expensive lifestyles. They may like to travel, go to shows and dine out. These are expenses that aren’t factored into the 18.5 year estimate. This means that the actual length of time that $1 million will last here in New Jersey may be even less than this estimate.
According to the Pew Research Center, the divorce rate for couples over the age of 50 has more than doubled from 1990-2015. There is no indication that this trend is going to stop anytime soon. Older couples going through a high asset divorce need to work to better ensure their retirement lifestyles are protected.