Home Economics No. 4: Divorced, 63, and living in Colorado with $50,000 in retirement savings

$1,092 for the mortgage, $273 for health insurance, and $33 a month on dance lessons

---

When I first read the entry for today’s HOME ECONOMICS, I knew immediately that I had to publish it. The woman featured here is so open about her financial experience even though she hasn’t had an easy time of things. But her story really speaks to the issues facing so many American women: the financial devastation of divorce, the cost of healthcare, the instability of the gig economy, and the retirement crisis facing millions. I am so grateful she shared her story, and I hope it can be a jumping off point for The Purse to cover some of these tougher topics. I’ll let her take it from here.

Want to submit your own money story? (It’s anonymous!)
Fill out our HOME ECONOMICS form.

About Me: About me: I got my first job when I was 14 years old, working as a carhop at a drive-in restaurant for $1/hour. After nearly 50 years of working, I am no closer to retirement than I was back then. I used to believe that financial security was simply the result of hard work and good choices. My understanding is more nuanced now. Yet my life is not without blessings. My mom, who is 89, in good health, and living independently, is my best friend. My two 20-something children are successfully “adulting.” I live near to dear family and friends, and my home is in the beautiful state of Colorado.

Age: 63
Location: A city on the Northern Front Range of Colorado
Relationship status: Divorced

All expenses are monthly unless otherwise noted.

Income: 

Salary: I'm essentially a gig worker, so my annual income—as well as monthly pay—is volatile. My three-year average total income (for ’23, ’22, ’21) was $58,167; my three-year average adjusted gross income (AGI) was $32,724. I try my best not to fall below an average of $4,500 a month, but as a freelancer, that’s largely out of my control.

Account Balances:

1. Checking account: $5,084

2. Savings account: $2,000

3. High-yield savings account: N/A 

4. Monthly contribution to savings account: My monthly income varies so much it’s hard to give an answer. When there’s a month when I have more income than bills, I stash that in savings. When there are more bills than money coming in, I pull what I need from savings.

5. Retirement accounts:

   • Traditional IRA (in CDs at 5% APR): $21,528

   • SEP IRA (in CDs at 5% APR): $22,215

6. Monthly contribution to retirement accounts: Like my savings, this really varies depending on how much I earn each month. Each March, I work with my accountant to figure out what my options are for putting money into my IRA or SEP. And by “options,” I mean: (1) Do I have any savings? (2) What do I need to live for the next few months? (3) What do I owe for the past tax year? (I do pay estimated taxes quarterly, but again, my income is so variable it is really hard to get the estimated taxes right!) (4) What are the limits on HSA, IRA, SEP for the past tax year? (5) How can I optimally balance what I owe against what I need to keep liquid to live on against what the tax impact is of putting what I can into retirement?

7. Emergency fund: My IRAs are my emergency fund.

8. HSA balance: $7,524. I try to max out the contribution to the allowable limit each tax year.

Total Savings and Investments: $58,351

Housing: 

9. Size of your home: 3-bedroom, 3-bath, 1,356-square-foot, single-family home

10. Mortgage: $1,092

11. Current value of your home: ​​$446,300 (per Zillow)

12. Current mortgage balance: $116,367

13. Year you bought the home: 1996

14. How much you paid: $116,000¹

15. Interest rate: 2.75%

16. Taxes: $179.13

17. Home Insurance: $282.90

18. Electricity: $80.50

19. Water: $82.71

20. Internet: $106

21. Housekeeper: N/A

22. Gardener: $58

23. Trash removal: $53.19

24. Natural gas: $111.42

25. Landline: $74 (need for my work)

26. Cell phone: $51.50

Transportation:

26. Monthly car payment: $0. But my car is 20 years old, so who knows how long this will last!

27. Car insurance: $115.95

28. Gas: $94.87

29. Car maintenance (oil change, tune-up, repairs, etc.): $2,420 last year = $202/month

30. Parking: N/A

31. Monthly public transportation: N/A

32. Ride shares (Uber, taxi, etc.): N/A

Children:

33. Number of children and their ages: 2 children, mid-20s. They are both college graduates who managed to graduate debt-free and are now successfully adulting (e.g. both are self-supporting). Yay!

Debts:

34. The only debt I have at this point is my mortgage.

Food:

35. Groceries: $770 (Note this includes everything else one might buy at the grocery store, from dry goods to printer ink to occasional clothing, so it might be a bit misleading.)

36. Dining out: $83 (includes DoorDash orders!)

Socializing and Entertainment:

37. Subscriptions (streaming services, magazines, etc.): Netflix $12.48; Amazon Prime (includes annual fee + occasional individual movie rentals/purchases) $29.41; Hulu (does not include live TV) $16.10

38. Memberships (museums, etc.): About $33 per month, but these are all related to my writing (business expenses)

39. Movies, concerts, other events: Less than $15

40. Other socializing: About $33 per month on all things dance: dance lessons, admissions fees for dances, etc.

Miscellaneous:

41. Clothing: Averages out to about $75 each month

42. Home supplies: N/A. This is included in my grocery expenses, since I buy all that stuff on my regular grocery run.

43. Exercise: Average about $25 per month to take classes at the local community college (strength training, tai chi, dance, etc.)

44. Personal and self-care (haircuts, manicures, massages, etc.): $50 for a haircut

45. Donations: Averages about $25, including St. Jude Children’s Research Hospital, Wikimedia, NPR, and PBS

46. Events (birthdays, graduations, etc): About $40 a month on gifts

Insurance:

47. Life: $150 for term life insurance policies on self and ex-husband (children are the beneficiaries)

48. Health: The second largest fixed expense in my budget, after my mortgage, is my health insurance premium. Prior to my divorce, our family was covered by the health insurance available through my husband’s employer. After the divorce, my husband’s insurance still covered the kids but didn’t cover me. As a freelance writer, I have to find my own insurance, since I don’t have access to employer-subsidized insurance. The expense has gone up and down over the years:

• In 2012 and 2013 (post-divorce, pre-ACA), I paid $583/month to maintain my health insurance coverage through COBRA provisions.

• In 2014, the ACA went into effect. I applied for health insurance through the Colorado version of the health insurance exchange, and I initially qualified for Medicaid.

• When my income increased enough so that I was no longer eligible for Medicaid, I continued to purchase health insurance via the ACA exchange. Over time, the premiums increased due to the rising cost of health insurance. In 2015, I was paying $320/month; by 2019, I was paying $808/month. 

• With the passage of the American Rescue Plan Act (2021) and the Inflation Reduction Act (2022), I became eligible for additional income-based subsidies for health insurance bought on the ACA. With the help of these subsidies, my monthly health insurance bill dropped down to $183/month in 2022.

• In 2023, I initially paid $198/month. However, if you incorrectly estimate your income (which I did because my freelance income is unpredictable), you have to pay the subsidy back at tax time. After I repaid the government, my actual premium cost for 2023 was $273 per month.

• Two takeaways: (1) When you are paying $600 to $800 a month for health insurance, there isn’t much left over to put away for retirement or anything else; (2) I am trying to hang in there until I am eligible for Medicare!

Total Monthly Expenses: $4,214

Tell us more:

49. What are your top financial priorities? 

    Earning enough to stay on top of my bills without going into debt. "Saving for retirement" is kind of a lost cause at this point.
    

50. How do you feel about your current financial situation? 

    Terrified. I am 63 years old with no pension and a ridiculously low amount of retirement savings. And anyway, my retirement savings is more like an emergency fund, which I expect to have to dip into when my 20-year-old car stops running or my 28-year-old HVAC system expires.
    

51. What are your money stressors?

    1. Volatile income—I’m always hustling for the next freelance writing job. 
    
    2. Taxes—I think you should add some questions about taxes (income tax bracket rate and effective tax rate) to your questionnaire.² As a self-employed person, this is a big deal for me. I am in the 12% income tax bracket, however, because I don’t have an employer who subsidizes my FICA (Social Security and Medicare) contributions, I am responsible for the entire 15.3% FICA contribution, as opposed to the 7.65% contribution that is deducted from a traditional employee’s paycheck. Because of this—and other nuances related to my freelance work and my filing status—even though my baseline tax rate is supposedly 12%, my actual effective tax rate over the past three years has averaged 63%. This is killing me! I earn too much to not pay taxes at all but not enough to qualify for the tax breaks available to higher-income/higher-net-worth individuals. I think there are a lot of other middle class folks in the same position as me. 

    
    3. No safety net (no family wealth, no spousal pension, etc.).
    

52. Do you expect to receive (or have you received) an inheritance from a family member? 

    I was raised by a single mother. She is 89 years old, living independently. Her home is paid off (estimated value per Zillow is $450,000). She lives on her $27,000 annual Social Security income (that’s her gross—subtract $2,000/year from that for Medicare premiums). She has less than $35,000 in retirement savings. (Nope, that is not a typo. See: “single mom.”) If she needs long-term care or expensive medical care, my sibling and I would need to sell her home to pay for her care. This has been the case for several people I know: Any generational wealth they had to speak of was in the house, but that value was cashed out to cover long-term care expenses and/or healthcare expenses. I think this kind of situation is not uncommon, where an older person’s only meaningful asset is their home, which ends up being liquidated for long-term care or medical care.
    

53. Do you receive any financial support from your family?

    No, I do not expect to receive any financial support from my family, and I’m dead set against relying on my kids for financial support. They are good kids and would help me if I needed it, but this is my point: If you aren’t born into a family with a certain amount of financial resources to start with, then your money is always flowing backwards, from the current generation to the previous generation. I DO NOT WANT THAT FOR MY KIDS. I want them to use their earnings to build wealth for themselves, not fill in the holes from the absence of wealth in past generations. 
    

54. Do you financially support any family members beyond yourself and your nuclear family?
    No. I’m grateful my mother and children are all self-supporting at this point.

55. Can you share a personal money success story:

    It was very important to me that both my kids graduate from college debt free. There are a few reasons why they were able to graduate without taking on any student loans:

    
    1. When my husband and I got divorced, my kids were 11 and 13 years old. At that moment, I wasn’t thinking about college. But a very wise friend of mine, who had previously gone through a divorce, advised me to make sure that the divorce agreement included a commitment to funding post-secondary expenses. Our divorce decree included the requirement that my ex and I would split the cost of post-secondary education (tuition, fees, books, room and board, ancillary expenses) 50/50. It was important to have that in writing as a legally enforceable commitment.

    
    2. My kids both attended a unique public charter high school (public = no tuition) that designed the curriculum so that all students completed high school requirements by the end of 11th grade. In the 12th grade, all students took full loads of community college courses. (My kids also took night courses when they were in 11th grade.) So they both entered the university system as sophomores and graduated in three years. (There are many school districts across the country that are now offering high school students the opportunity to earn college credits while still in high school. These programs carry names such as “dual-enrollment programs and early-college programs.”)

    
    3. My kids both attended in-state, public colleges. This was the most affordable option for us.

    
    4. At one time in my work life, before I became a freelance writer, I worked in a community college system, so I knew my way around higher-ed bureaucracy. I knew how to scour the internet and hunt through college financial aid web portals for every scrap of potential scholarship dollars and every possibility of extra financial support. My kids probably completed over 100 scholarship applications each, and they got really good at writing scholarship essays. (BTW, we did a deep dive into scholarship searches beginning when they were in 11th grade and continuing each year until they graduated from college. Although many scholarships are targeted toward first-year students, there are also other opportunities that open up when students are farther along in their studies.)
    

56. What is one financial goal(s) you still want to achieve?

    Retirement savings is a pipe dream at this point. When I am no longer able to earn a living, the gig will be up. Literally.
    

57. What do you regret spending your money on the most? 

    This is probably TMI, and it's not really a regret, but more of an explanation. The year I turned 51, my husband decided he no longer wanted to be married. Our children were then 11 and 13 years old. Divorce can be devastating to a person’s finances.³ I made some choices: I decided to keep our family home and paid my ex his share of the accrued equity, and I doubled down on my freelancing career. In hindsight, different choices might have made a difference in my current financial position. However, I did what I thought was best for my children at the time, by keeping them in the home they had grown up in and maintaining my freelance career so I could be a present parent. Being a present parent is so hard to do when you are a single parent. Those might not have been the best financial decisions I could make, but my kids are thriving now, and so I don’t regret those choices.
    

58. How did your divorce impact your finances?

    It had a huge impact on my finances, and I don’t think I will ever recover from it (financially). Before our divorce, my husband and I were in our peak earning years. He had a traditional full-time job, earning around $60,000, and I worked as a freelancer, also making around $60,000. I really think when you have kids, having one parent freelance and one parent work a full-time job is ideal. Your family can enjoy the flexibility of the freelance life with the benefits (like health insurance) of having a full-time job. 

    
    While I did get $9,000 a year in child support in the divorce settlement, I didn’t ask for any spousal support because I really believed I could do it on my own. But the same month I signed the divorce papers, I also lost my main freelance client when the company went through a merger and decided to terminate all contract workers. So in less than a year, I went from a household income of $120,000 to being an unemployed single parent.

    
    The first few years after my divorce were traumatic. I applied for regular jobs, but at the age of 51, with no recent full-time work history, I didn’t get a single interview. My kids qualified for the free and reduced lunch program. I came close to filing for bankruptcy, but I didn’t want to lose the house. My kids had been through so much, and it was important to me to at least be able to stay in their childhood home to maintain some stability.

    
    It took me nearly four years to rebuild my freelance business to the point where I was earning as much as I had been before the divorce. But I needed money to support myself and my kids while I was rebuilding my freelance career. I ended up cashing out my defined benefit retirement plan, which had a balance of about $70,000 at the time I got divorced, in order to keep our family afloat. I didn’t have any other resources to draw from.
    

59. What is one thing you spend money on that makes your life better?

    Three things: dancing, books, and streaming services. Dancing, reading books, and watching movies are my go-to antidepressants when life gets overwhelming. I love every kind of dance: Zumba, line dance, ballroom, country swing, contra—whatever happens to be available, I will take a class in it. Right now, square dancing fits the bill for me. It’s really fun, really social, and very affordable. And since my work life consists of me sitting in front of my computer, working alone for hours every day, the beauty of dance is that it is the exact opposite of my work life!
    

60. What is one thing you spend money on that drives you crazy?

    DoorDash. I didn’t discover DoorDash during the pandemic like everybody else. I discovered it two years ago when I broke my shoulder and couldn’t drive for several weeks. How convenient to get hot, tasty food delivered right to your door! Some days when I’m too tired to cook, or I haven’t made it to the grocery store and my fridge is empty, it’s just too tempting.
    

61. Is there anything else you would like to add?

    I LOVE your Home Economics series! It’s so interesting to see what other people’s financial lives look like. In the comments on your last post, you said, “People with good finances are always more likely to share than those with more complicated money situations.” Ha! That inspired me to send you my story, since my finances are a hot mess, and maybe that will resonate with some of your readers!

Thank you so much for sharing your story!

I’m happy to open the comments for today’s Home Economics, but please post with kindness! I will delete any comments that are not in the spirit of this community!

---

---

*Disclosure: If you purchase something through my links, I may earn an affiliate commission—this is at no cost to you. I only recommend products and programs I believe in. Thanks for your support.

1. Yes, I owe more on my mortgage now than my ex-husband and I originally paid for the house. When I was married, we refinanced a couple of times to take advantage of lower interest rates, but we never shortened the term because we couldn’t swing the higher monthly payment for a 15-year. Just a few months before my husband announced he was leaving me, I had refinanced to a 15-year fixed. (Clearly, I was clueless that he was about to walk.) When we divorced, I had to turn around and refinance again into a 30-year (I couldn’t swing the higher mortgage payment on my income), and I also took out a home equity line of credit (HELOC) to pay him his share of accrued equity in the home because I didn’t have any other resources to do so. I will be 91 years old when I finish paying off this mortgage.

2. Editor’s note: This is something I’m thinking over for future editions of HOME ECONOMICS. Any thoughts on this, please let me know!

3. A 2022 study published in the Journals of Gerontology on “Gray Divorce” (which is defined as divorce among people 50 or older) found that women experienced a 45% decline in their standard of living following divorce, whereas men’s dropped by just 21%.