Mar 7, 2025
Going through a divorce can be tough on your finances, but the challenge can be even greater when you’re north of 50 years old.
That, unfortunately, is the reality for many Americans. According to The Journal of Gerontology, 36% of U.S. adults going through a divorce are 50 or older. They call it the “gray divorce,” and it’s becoming increasingly more common in today’s America.
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So, let’s say you’re 58 years old, your divorce cost you $120,000 and the settlement has decimated your savings. You earn $51,000 per year but the settlement has left you living paycheck-to-paycheck, and now you’re wondering what you have to do to get your retirement savings back on track so that you can retire at 65.
First, we’ll have to do some quick math, so let’s get into the numbers.
How much do you need to save for retirement?
The first step to rebuilding your retirement savings is figuring out how large your nest egg must be to retire at 65.
That starts with estimating your final salary, as you could potentially receive a few pay increases over the coming years. If you assume a 2% annual salary increase from age 58 to 65, you'll likely have a final salary that sits around $58,583. Once you have that number, there are a few ways to calculate how much you'll need to invest for retirement.
One way to calculate how much you’ll need is to multiply your final salary by 10. Using this calculation, you'd need $585,830 saved in order to retire comfortably at 65.
Another approach is to assume your retirement finances will need to replace about 80% of your pre-retirement annual income, which comes to roughly $46,866 per year (80% of $58,583). Social Security should replace around 40% of your pre-retirement income — roughly $23,433 per year — which means your retirement savings will also have to cover $23,433 per year (the remaining 40%) in order to hit that $46,866 target.
If you were to use the 4% rule — which means withdrawing just 4% of your retirement savings every year — that $23,433 annual figure would have to equal 4% of your retirement portfolio. By that calculation — $23,433 in annual withdrawals for 25 years — you’d need to save roughly $585,825 before you retire.
As you can see, both approaches give you roughly the same number. Now that you’ve calculated a solid number for your nest egg, the next thing you should do is figure out how much you must save per year in order to hit that target.
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Breaking down your retirement savings goals
So, you’ve figured out how much you’ll need to save and you’ve got seven years to hit that target before you reach your desired retirement age of 65. It’s now time to start saving, but your ability to hit that $585,825 target will depend on how much money you have saved to start with.
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Assuming the divorce settlement has completely depleted your retirement savings and you’re starting from scratch, you'd need to invest around $5,471 per month to reach your goal, assuming an 8% average annual return on your investments.
Since you only make $51,000 a year, that's likely not possible. So, unless you have some post-divorce assets to get you started, or you have a clear plan to quickly increase your income, you'll likely have to adjust your retirement plans.
You can use an online savings goal calculator to figure out your specific investment needs, depending on what you're starting with, and see what's possible given your income.
How to rebuild your nest egg to retire on schedule
The unfortunate reality is that you may not be able to retire at your desired retirement age. With this in mind, working longer may be necessary in order to stock up on savings and make up the money that you had to give to your ex.
However, if retiring at 65 is still the goal, there are certain things you can do to help you save as much as you can and build the security you need.
Some options include:
- Working a side gig to save more for retirement.
- Automating your 401(k) contributions to hit your savings target.
- Taking advantage of your employer matching your 401(k) contributions.
- Delaying your Social Security claim — your benefit check will increase by a certain percentage for each month that you delay your benefits beyond full retirement age.
- Selling assets, such as your house, and investing the money for retirement.
- Working part-time after retirement so that you don't need as much income from savings.
- Downsizing your lifestyle in retirement, including moving to a lower cost-of-living area.
The right option, or options, will depend on how much flexibility you have with your work, retirement date and where you plan to live. But what’s particularly important is that you don't retire until you are sure you’re ready, as you wouldn't want to give up your career only to find that your savings don't stretch far enough and you're struggling financially in your golden years.
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Christy Bieber has 15 years of experience as a personal finance and legal writer. She has written for many publications including Forbes, Kilplinger, CNN, WSJ, Credit Karma, Insurify and more.
