These days, 1 in 4 couples getting a divorce is older than 50. Untying the knot later in life is a different animal, in many ways: You’re further along financially, with more assets (and possibly debts) to untangle. And you’re closer to retirement age, suddenly faced with funding two separate lives when you’ve saved for one.
“What makes divorce challenging for people in their 50s, and in their late 50s, especially, is the fact that typically one spouse tends to be unprepared for divorce and that creates a huge amount of angst and fear because there are fewer years to replenish assets by earning money and more concerns about what happens to the nest egg that we were planning to live on under one budget, and now will have to break up,” says Lili Vasileff, a certified financial planner in Greenwich, Connecticut.
That makes planning your moves, both during and after the split, all the more important. Here’s what to consider:
Where you stand together. In other words, you both need to take a hard look at your financial profile. Does one of you want to keep the house? Do you both want to downsize? What will the relocation costs be? Do any loans need to be paid off or refinanced? Do you have enough liquidity?
“It calls for an examination of what your assets and debts are, to get a hard look at making sure you both understand what exists, if you can communicate and plan this separation together,” Vasileff says. And if you can’t? This can be resolved with the help of a mediator or your attorney.
Where you stand alone. Take the time to run the numbers to figure out what your lifestyle costs are going to be post-divorce, says Nicole Mayer of Life Transition Specialists, a holistic wealth management firm in Chicago. “One mistake is not understanding what your cash needs are and not having money set aside (to meet them). Go in with what is your worst-case scenario.” You may want to open a bank account and a credit card, Vasileff says. “This is all aboveboard; you’re going to be financially independent, and it’s important to get a head start on that.”
Once you’ve covered that, do a few updated retirement calculations to figure out how much money you’ll need to reach your retirement goals. Many people don’t want to face this figure, but you can’t plan for it with your head in the sand. Once you know your goal, you can start working toward it by finding work or planning to work longer in your current job. If retirement savings were amassed while you were married, in most cases those will be divided in a divorce, Vasileff says.
How joint expenses will be handled. If you were previously covered under your spouse’s health insurance policy at work, and the divorce will leave a gap, that needs to be addressed. Similarly, consider changes to other joint policies, like long-term care insurance, auto insurance and annuities. “When you break these apart, they become more expensive,” Vasileff says.
Finally, at this stage in life, you may have adult children or elderly parents you want or need to support. A divorce agreement will sort out arrangements regarding minor children, but there is no legal obligation to pay child support past majority age. “This is a big issue for baby boomers: How much will they continue to support young adult children, and that is at the discretion of both parents,” Vasileff says. That means if you’ve been paying rent for your daughter in college, and you want to continue to do so but your spouse does not, you may need to come up with that money. Same goes for the home health aide for your mother.