The new Millennium brought one trend that has firmly settled in and the statistics show ‘baby boomers’ are divorcing at double the rate from the late 20th Century. As life expectancies continue to increase, attitudes about divorce continue to evolve. And while it’s not still rapidly increasing, ‘boomer’ divorce rates are not diminishing. It’s a sad fact that divorce after age 50 can be financially devastating, especially if you’re close to retirement.
You set aside a comfortable retirement nest egg that calculated golden years spent together as one. Now those same funds will have to support not one, but two households. Experts estimate that expenses after divorce are anywhere from 30-50% more than if you stay together. That comfortable nest egg must now fund two of everything: Two homes, two cars, separate vacations, separate trips to see the grandkids, etc. This duplication can eat into a retirement fund at an alarming rate.
More than likely, you will face some difficult choices. You can either reduce your standard of living, or retire later and increase the amount you put in your investments. You may both have to consider selling the marital home to split the proceeds so both parties can downsize. That equity can change into income to live on, so selling the home may make a lot more sense than one party trying to keep it and, quite possibly, may be the only answer to make retirement a possibility for both.
Illness and disability may also force some difficult choices. As a couple, there is some comfort in knowing that if one of you becomes ill or disabled, the other partner will be there to help care for you. After divorce, that burden would fall to your children or eat away at that nest egg once again when you need to hire help.
If you find yourself considering divorce after age 50, the best thing you can do to minimize the damage in the process is to be as cooperative with your spouse as possible and get prepared with organized financial documents. Most importantly, to minimize the financial toll, be sure to hire a financial advisor along with that lawyer or mediator. If you have a financial advisor, and you feel they had a closer relationship with your ex, then you may be more comfortable hiring a new qualified financial advisor.
With the children likely being grown, the primary devastation of a gray divorce will be to the finances and your emotional health. Chartered Financial Divorce Specialists (CFDSs) are specially trained in the area of finances in divorce and can help you make sure you are covering all of the necessary issues. They can help you see with certainty if you can reasonably keep the house, if spousal maintenance is necessary, and how to split the Pension. Some lawyers or accountants do have the credential but if not, it is well worth the investment to add a CFDS to your team. I am not only a CFDS, but have been a financial advisor for two decades and am here to help. Let the professionals handle the finances and legalities so that you can take care of you.