Divorce after age 50, or a “grey divorce”, has its own set of unique issues. One of the most significant is when one spouse has been out of the workforce. Most couples are not fortunate enough to have saved enough for retirement for both spouses once the marital assets have been divided. In those cases, the time to save for retirement is drawing short.
When one spouse has not worked
In many cases with this generation, the wife was a stay-at-home Mom. While this does not have a great effect on division of assets, it has a significant impact on that spouse’s ability to save for retirement. The ability to get a job and start a career with immediate real earning power is difficult. What I usually see in these cases is that their income, combined with spousal support, might pay the bills but will not be enough to allow her to save for retirement. In some cases, spousal support is not enough and any savings, at least until a substantial enough income can be earned, get used.
The need to know what your financial future holds
As part of my process as a Certified Divorce Financial Planner, particularly in the case of long-term marriages where there is a large discrepancy in work histories and future earning ability, I can provide insight as to the impact of the financial splits both in the short term and looking years down the road. I do this by adding inflation increases to budgets and incomes, conservative return rates on investments, making additions, deletions, or changes to budget items (for instance when houses are purchased) and by changing income in future years (for instance when support ends or a party retires). By doing this, a divorcing couple can look at their settlement proposals and see the impact of financial decisions on their life after divorce and the impact it will have long term and into retirement. By tailoring financial agreements to the unique circumstances of the couple, I can illustrate the probable effect that a proposed settlement can have on their financial future and lifestyle. This is extremely important with helping negotiations in a long-term marriage where the illustrated outcomes are very lopsided.
The CDFA guides divorcing couples towards agreements that are not only equitable in the present, but also conducive to their financial futures. By emphasizing long-term implications and financial literacy, couples can navigate the complexities of divorce with confidence and foresight.
