Divorce can be a burden, both emotionally and financially. For those over 50, likely preparing for retirement, divorce can be financially destructive. Retirement plans can quickly unravel, assets can disappear, and many late in life divorcees, especially women, find themselves in poverty post divorce. Late in life divorces, often referred to as gray divorces, are on the rise in America. For those ages 55 to 64, the divorce rate has doubled since the 1990’s, and for those 65 and older, the rate has tripled. Today, around one in four couples over 50 years old divorce, and it is more important than ever that late in life divorcees plan accordingly for their future finances.
When a couple over 50 divorces, retirement plans can change dramatically. One or both spouses may have been considering retirement in the near future, but post divorce, this may no longer be viable. For working spouses, this means staying at work for potentially years longer than planed. “We often recommend that our older clients keep working as long as possible to pay for their on-going expenses,” says one financial specialist.
This also means that in many cases, spouse who have not worked in years or at all during their marriage will also be required to enter the workforce, as they will have their own expenses to take care of. Rejoining the workforce can be difficult, especially at an older age and in addition to the stress of divorce.
Prepare for a Lifestyle Change
Realistically, most older couples do not have enough in savings or extra income to maintain their lifestyles post divorce. One financial specialist says that it costs 25 percent more on average for a couple to maintain two separate households versus one. Unfortunately, the extra 25 percent is rarely available, meaning that both parties should plan for a change in lifestyle. This may mean less expensive cars, cheaper phone plans, and downsizing all around. Experts say that for some, it may be tempting to allocate less towards retirement and instead maintain the same lifestyle, but doing so can put future finances at risk. Instead, couples are encouraged to prepare to lower their expectations early in the divorce process.
Get Access to All Potential Income
Pensions and social security can be extremely beneficial to recent divorcees, so it is important to ensure that each party receives what they are entitled to. If you and your spouse were married for 10 years or longer, and you are 62 years old or older, you are eligible to receive retirement benefits from your former spouse, so long as you remain unmarried. Additionally, both spouses should ensure they receive any pension payouts they are entitled to.
Consider Selling the Family Home
For couples leaving long term marriages, letting go of the family home can be a difficult but necessary step towards ensuring future financial security. For most late in life divorcees, selling the family home is the best option, as it is likely too expensive for just one party to maintain on their own. One specialist says couples should sell their shared home during, not after divorce, as an after divorce sale could bring with it a capital gain tax that could be avoided with a sale during the divorce.
Minimize All Debt
For divorcees of any age, dissolving a marriage does not free either party from past debt. You are responsible for any debt that has your name on it, no matter if your spouse agreed to pay it post divorce or not. If possible, work with your spouse to pay off debt prior to your divorce. If that is not an option, be sure to separate your debt into separate accounts so that each of you is only responsible for your portion moving forward. Otherwise, each party’s potential credit scores are at risk in the future.
Our Attorneys Can Help
Divorce at any age can be difficult, but the experienced DuPage county divorce attorneys at Abear Law Offices are here to help. You need an attorney who can navigate the complex Illinois legal system and help you ensure a bright future. Call 630-904-3033 to speak to a member of our team today.