Many individuals do not consider divorce a significant threat to retirement savings — a surprising finding given that divorced individuals have less saved in retirement than married individuals and are more likely to be bankrupt. This suggests individuals do not give enough consideration to the impact divorce can have on retirement savings.
Older citizens face many challenges in saving for retirement including longevity risk, insufficient investment returns and long-term costs such as healthcare. One of the less well-covered aspects of retirement savings is the impact of personal events such as divorce. A legal divorce, where assets earned during the marriage are split between the two spouses, can significantly impact retirement savings.
The data referenced throughout this paper is a combination of CoreData Research calculations based on data files from various sources as well as content from other reports and surveys. Instances in the report where CoreData Research calculated its own figures from various sources is mentioned in-text.
There are multiple ways to define the divorce rate such as the crude divorce rate, the percent ever divorced, the refined divorce rate and the cohort measure rate. For the purposes of this paper, when we refer to the number of divorces on a state-by-state basis we are usually referring to the total number of persons divorced divided by the amount of 1000 persons over the age of 15. The minimum marriage age for most US states with parental consent is 16 so this is the justification for an “eligible” person being over the age of 15. Considering the total population as part of the pool of people eligible for marriage is ideally avoided when possible because this would result in people being included who are too young. This rule applies for the data referenced in section 2. The only exception in this report is for the state-by-state data in section 4, which considers the number of people divorced compared to the total population and not just those older than 15. Although not as ideal as only including those older than 15 as eligible persons, the time-series data is presented this way by the National Vital Statistics System and is therefore simpler to represent the data in this format.
In the case of data from the Survey of Consumer Finances, CoreData Research mainly used the public data file and not content from the whitepaper of the report. This was because information in the report didn’t necessarily pertain to the actual topic of the paper as published but the data collected by the SCF, released as a public data file if presented in an alternative way, was very pertinent to the research topic. The figures referenced throughout this paper are therefore usually based on calculations or new groupings by CoreData Research and not the actual groupings of the SCF.