You may have heard the term “gray divorce” in recent years, which means a divorce for couples over the age of 50. Many older couples who have been married for decades know that divorce is what they want but have many questions about their post-divorce life.
These questions usually involve finances. If you are considering a gray divorce, one of your biggest concerns is likely wondering if you have the means to afford the lifestyle you have become accustomed to over the years.
Common concerns in a gray divorce
This is especially true if you are at or past retirement age and continuing or returning to full-time work is not an option. Perhaps you do not want to move out of the house you have lived in for years or share half of your retirement earnings with your spouse.
Alimony and spousal support can also take on larger roles in a gray divorce. Couples who are younger and have many working years ahead of them are generally less likely to be awarded alimony or spousal support and might be less concerned about it.
However, in a gray divorce, alimony or spousal support are often the only available means for a person to support themselves.
These concerns are valid, since a gray divorce can be financially harmful if it is not handled properly.
Another issue with a gray divorce is the amount of time it takes spouses to financially recover. Almost everyone comes out of a divorce financially worse off than they were when they were married.
If you are older, you have less time to recoup the financial losses suffered. If you are close to or at retirement age, you could lose out on the opportunity to work full-time to regain your financial stability.
These are all examples of factors that make gray divorces unique, but there are many steps you can take to avoid or reduce the negative financial implications of a gray divorce.
Know and understand your financial picture
Carefully assess your financial situation. You will be required to complete financial disclosures where you list your assets, debts and the value or balance of each.
After so many years of marriage, you may not be sure of your financial scenario. This is common in gray divorces.
Consider working with a financial advisor to help understand your current financial situation. Learn about your financial needs, budgeting for your single life and develop a retirement plan.
Decide what to do about your housing situation
Once you have an idea of your financial picture, assess your living situation. You might need to relocate and downsize from your current home.
This is sometimes necessary even if your spouse agrees that you can keep the marital home, which you could have strong personal or emotional ties to. However, if you cannot afford to keep up the marital home on your own, you may need to sell it.
If you relocate, think carefully about where you relocate to. Moving closer to family or to a different environment could be best for your financial and emotional health.
Finally, do not forget to update your estate plan. This task is easy to forget in any type of divorce. Update your will, power of attorney and beneficiary designations.