From the web: How One Woman Overcame A Divorce Late In Life
How One Woman Overcame A Divorce Late In Life
A late-in-life divorce, particularly after 50, is one of the toughest transitions to make. As I talk to recent divorcees, I find there is a myriad of emotions. They range from shock to anger to a sense of hopelessness that retirement means Alpo and asking people, “Do you want fries with that?”
I recently met with a divorcee named Betty who was getting ready to retire and completely “flip the script” on what people think life after divorcing post 50 looks like. She was a devoted stay-at-home wife and mother married for 25 years until her husband announced one day that the marriage was over and filed for divorce. At fifty, Betty found herself back in the workforce after a 25 year hiatus.
She told me that after the fear and anger subsided, she began to see her divorce as a new beginning, a way to reinvent herself. Betty heard from her friends the horror stories of women returning to work in the latter half of their lives and she decided her story would be different. She knew it was going to be hard, so she swallowed her fear and went back into the workforce with a battle plan.
Betty realized that her best shot of retiring before 100 was to downsize her life as much as possible so she could save as much as possible for retirement. Being a fan of the popular 1980’s sitcom “The Golden Girls”, she decided to take in roommates. Not only did it help reduce her expenses, but it gave her time to let her home appreciate in value so she could sell it for more money. The other benefit was the camaraderie of women who were also over 50 and recently divorced.
Betty realized that she needed to upgrade her skills, but she did not want to go back to school for four years. She looked for jobs that paid well and required only an associate's degree and settled on a career in healthcare. Betty wanted help paying for school so she took whatever job she could get at a local hospital that helped pay for her two-year degree. She also learned that some companies, like Starbucks, have programs that may pay for part or all of college tuition.
Once Betty graduated, she strategically looked for a job based on both salary AND benefits, particularly a 401(k) plan and health insurance. She eventually accepted a position that paid slightly less than others, but had great benefits such as a higher 401(k) employer match and employer contributions into an HSA. As hard as it was for her, Betty knew the importance of saving for retirement so she maxed out her 401(k) plan contribution.
She knew this meant sacrificing many of the things she wanted. However, Betty recognized that she’d rather make the choice to sacrifice her wants now, rather than having no choice in sacrificing her needs later in life. She was a conservative investor, so by the time I met her at age 66, her 401k plan was worth over $300,000…not bad for a woman that started a new career at age 50!
Because her Social Security record is relatively short, her benefit is not as high as she would like. I mentioned that since the marriage lasted at least 10 years and she was unmarried, she may be able to claim her spousal retirement benefit now, still work for a few more years and then switch to her own benefit, which would have accumulated an extra 8% a year in delayed credits. Because Betty was born before Jan 1, 1954 and her ex-spouse is over 62, she may still be able to file what is called a restricted application. This means she can file strictly for her spousal benefit now, let her own benefit grow an extra 8% a year for the next four years, and then switch back to her own now higher benefit.
Betty enjoys the career she has built and she is now poised to retire in a few years. Her home had appreciated enough for her to sell it and buy a much smaller home outright. She still plans on taking in roommates to help share the cost though.
Betty, armed with a plan and a lot of courage, has managed to buck the trend and retire on her own terms. A major life transition like a late-in-life divorce does not have to mean the end of retirement. It means regrouping and creating a game plan that requires courage to step into the unknown and sacrificing some of your wants now so you will not have to sacrifice your needs in retirement.