How Does Divorce Affect Retirement Security?

IB#18-12

The brief’s key findings are:

  • While the divorce rate is no longer rising, about 40 percent of marriages still end in divorce.
  • The financial costs can be high: a divorcing couple pays legal fees, may need to sell illiquid assets, and has to cover the costs of two – rather than one – residence.
  • Not surprisingly, the analysis finds that households with a past divorce are much more likely to be at risk for maintaining their standard of living in retirement.
  • Interestingly, for one divorced group – single women – the impact is negligible, perhaps because higher child care costs are offset by retaining the house as an asset.