In this age of freedom and fairness, Baby Boomers are divorcing at an ever-increasing rate. From 1990 to 2010 the number of divorces for people over age 50 doubled. As our life expectancies continue to increase and attitudes about divorce evolve, Boomer divorce is likely here to stay. Unfortunately divorce after age 50 can be financially devastating, especially if you’re close to a planned retirement.
You set aside a retirement nest egg and now those same funds will have to support not one, but two households. Experts estimate that expenses after divorce are anywhere from 30-50% more than if you stay together. You now must fund two homes, two cars, separate vacations, separate trips to see the grandkids, etc. These expenses can eat into a retirement fund at an alarming rate.
You’ll likely be forced to make some inevitable choices. You will have to either retire later, reduce your standard of living, or go back to work and increase your savings. If either partner is planning to keep the home, it might not be the best idea. You’ll need that equity to throw off income to live on and it might make a lot more sense to sell it and split the proceeds so both parties can downsize.
As a couple, there is some comfort in knowing that if one of you becomes ill or disabled, the other partner will be there to help care for you. That burden could fall to your children after divorce or hit that nest egg again when you need to hire help.
If you find yourself considering divorce after age 50, do your best to minimize expenses in the process by being prepared with organized financial documents and by being as cooperative with your spouse as possible. Most importantly, be sure to hire a financial advisor along with that attorney. Certified Divorce Financial Analysts (CDFAs) are specially trained in the area of finances in divorce and can help you make sure you are covering all of the issues.
Some attorneys or CPAs have the credential but if not, it’s well worth the money to add a CDFA to your team. For clients at Clarity Financial, we’re pleased to have a CDFA on our team and she can help with any questions or issues. Let your advisor know if you or your loved ones need assistance.
If you are interested in learning more about CDFAs and how they can help you with a smarter divorce solution, contact our team for a complimentary consultation.