Gray divorce refers to divorce among people 50 years old and older. According to studies, gray divorce rates are on the rise. With that in mind, there are some tips that Maryland divorcees can keep in mind for retirement planning after a divorce.
Evaluate your new financial reality
There is simply no escaping the financial impact of divorce. According to studies, the average divorced household reports a 30% lower net worth than non-divorced households and a 7% higher chance of not having enough money to survive retirement.
Maryland is not among the nine community property states in the US, so a judge probably won’t split the retirement funds you and your ex shared 50/50. This may result in the need to cut some expenses, increase income or put off retiring.
Consider your options for retirement savings
After a divorce, you can reevaluate where your retirement investments go. While many people choose employer-sponsored retirement plans, there are benefits of Roth and Traditional IRAs. Consider the benefits of each option and choose the one that makes the most sense for you.
Reevaluate your retirement needs
There is no avoiding the fact that your divorce is going to have an impact on your financial status. Work with a financial professional to better understand how much money you need to retire as a single person. When you have concrete financial goals in place, it’s easier to stay on track.
Remember to plan for healthcare
Since Medicare doesn’t cover long-term healthcare, medical expenses have the potential to drain your retirement accounts quickly. Consider adding long-term care insurance to your financial plan to better protect yourself.
Divorce is always a scary proposition, and that’s perhaps even more true for people nearing retirement age. Making sound financial decisions allows you to avoid added stress during the latter years of your life.