Retirement and Survival: The “Gray” Divorce
As our life expectancies continue to increase, our attitudes about divorce continue to evolve. And while it’s not still rapidly increasing overall, the Baby Boomer generation is divorcing at double the rate from the late 20th Century. So is the 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. And 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 your savings. You may both have to consider selling the marital home to split the proceeds so both parties can downsize. That equity can throw off income to live on, so selling may make a lot more sense than one party trying to keep it.
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 could fall to your children or hit that nest egg again when you need to hire help.
If you find yourself considering divorce after age 50, the best thing you can to 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 who is a Certified Divorce Financial Analyst (CDFA) along with your attorney or mediator. A CDFA is specifically trained in the area of finances in divorce and can help you make sure you are covering all of the necessary issues.
With the children likely being grown, the main devastation of a “gray” divorce will be the finances and your emotions. Enlisting the help of a CDFA can help you see with certainty if you can keep the house, if spousal maintenance is necessary, how to split the Pension, and how to handle health, long-term care, and life insurance. Some attorneys or CPAs have the credential but if not, it’s well worth the money to add a CDFA to your team. Let the professionals handle the finances and legalities, so you can focus on taking care of yourself.
As always, if I can ever be of assistance to you or someone you know, please do not hesitate to call or email me directly at 803-576-4932, Amanda.Gunn@raymondjames.com
Sincerely,
AMANDA SIMCONIS GUNN, CDFA®, AAMS®
Financial Advisor
Any opinions are those of the author and not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.
