The financial toll of divorce can be especially steep at an older age; people divorcing after 50 should take several steps to ensure financial security.
Conventional wisdom holds that people who stay together through the first decade of marriage will probably spend the rest of their lives together, but a growing number of older couples in Lake Elmo are discovering this is not the case. Nationally, the rate of divorce among couples over 50 has doubled since 1990, according to Forbes. One-fourth of people in this age group are now divorced.
Divorce is never an easy or simple process, especially from a financial perspective. Unfortunately, people who divorce later in their lives may face even more challenging financial issues than younger people going through divorces.
Financial hurdles
The basic expenses of living independently can put a strain on many divorced couples. Forbes reports that post-divorce household income decreases an average of 25 percent for men and 40 percent for women. Furthermore, the per-person cost of living alone is 40 to 50 percent greater than the per-person cost of living as a couple. Couples of any age face these issues, but older couples can be hit especially hard.
Older couples only have a limited amount of time to prepare for retiring independently, which can cost significantly more than the retirement they planned and saved for. Additionally, spouses who left the workforce or chose jobs primarily as a source of supplementary income may not be prepared to resume supporting themselves during their working years or during retirement.
Worse still, according to the New York Times, many spouses do not understand or claim all of the assets they are entitled to. Some people may sacrifice significant assets because they think they cannot afford a prolonged or costly divorce. Spouses may also unwittingly miss out on valuable property, such as pension plans or stock options, because they do not realize the property is marital.
Ensuring financial stability
It is beneficial for older people going through a divorce to hire a financial planner early in the divorce process. According to Forbes, spouses should take the following steps:
- Gather copies of all financial records. Spouses may even want to hire a forensic accountant to look over those records for possible hidden assets or discrepancies.
- Evaluate any outstanding marital debts that will be divided when property is divided. A credit report can reveal debts a spouse may not be aware of.
- Create a financial plan for becoming independently financially stable. The plan should include saving for retirement and paying off any outstanding debts.
- Consider the tax implications of divorce. Decisions to hold or liquidate certain assets may lead to significant taxes; spouses should evaluate their immediate financial needs to determine which assets are most favorable to pursue.
Anyone preparing for a divorce later in life should work with an attorney who is experienced in handling high-asset divorces and subsequent steps, such as estate planning. This can improve the likelihood of a person maintaining financial solvency and successfully transitioning to an independent life after divorce.
Keywords: gray divorce, retirement, assets