The divorce rate is declining for all segments of the population, except for those 50 and older. If getting older wasn't hard enough, right? It's even been given a name: "gray divorce.” According to Dr. Susan Brown, co-author of "The Gray Divorce Revolution," the divorce rate among those 50 and older has roughly doubled since the 1990s.
For couples who divorce later in life, it can have a devastating impact on their finances. Not only do you have to reevaluate your retirement plans (and savings), you must also figure out how to live on your own, which is going to be more expensive. And for those who are already retired, it can be very difficult to recoup what has been lost and sustain your current lifestyle. But there are things you can do to help minimize the effects.
Create an Inventory of Debts & Assets
It may be daunting to decide where to start, but simply getting out a piece of paper and listing your debts and assets is a good first step. Here is a high-level list of items to consider including in each category.
If you and your spouse are unable to sit down and make this list together, you each may need to seek the assistance of an attorney. It is important to ensure that debts and assets are equitably distributed. Reviewing prior tax returns can be helpful in compiling this information as well as obtaining a credit report for both of you to avoid any surprises.
Create a Budget for Yourself
Living solo costs more than living with someone else. The lifestyle you had when you were married may no longer be an option. And your ability to save for the future may also be affected. Just as you took to pen and paper to list your debts and assets, you can do the same to draw up a monthly budget for yourself.
Start by outlining your monthly income, and then make a list of your monthly debts. If you are still working, make sure to maximize your savings through employer-sponsored plans or your own retirement accounts. With fewer years until retirement, saving is a priority. It is crucial to make lifestyle sacrifices now so you can have more money to do what you want when you retire.
If you are already retired and are finding your monthly debts are more than your income, you may need to consider finding a part-time job or adjusting your lifestyle to decrease your monthly costs. If you kept your family home as part of the divorce, consider ways to use its equity or selling it altogether.
Anyone going through a divorce should prioritize their long-term financial well-being, but it is especially vital for individuals over 50 who have fewer working years ahead of them or may have already reached retirement. At IM Wealth Partners, we have an experienced team who can help you navigate your financial planning needs during this difficult time. We're here to help. Contact us today.