Gray divorce is on the rise and it presents some unique challenges. If you’re splitting up after 50, it’s smart to give careful thought to your financial and social future.
Divorcing later in life means there’s less time to recover financially than for those who part ways at younger ages, possibly making it necessary to work longer or adjust your lifestyle. Gray divorce comes with social impacts, too, like potential changes in living arrangements, housing, and relationships. But by taking the time to understand the many implications of gray divorce and planning for the adjustments that come with it, you can be on your way to creating an enviable future. Follow these tips for a post-divorce retirement you can embrace with confidence.
Keeping the house might not be a great idea. You’ve probably spent decades in your beloved home, so you may not like the thought of relinquishing it. But compared to retirement savings, a home is likely to have ongoing and unexpected expenses, and its future value is uncertain. If you’ll need to use other assets to keep the house and its continuing upkeep will be a stretch, it’s probably better to sell and buy something more practical.
Get a handle on your debt, as well as you spouse’s. When it comes to divorce and debt, full disclosure is of the utmost importance. Your divorce attorneys or mediator should be able to provide each of you the other's debt information and credit reports. Depending upon where you live, you could be responsible for half of your spouse’s debt, even if it’s not in your name. It’s best for you and your spouse to satisfy your debts before the divorce decree is final, if possible.
Fill in the health insurance gap, if necessary. If you’re currently covered by your spouse’s health insurance or by a family policy through another source, after your divorce you may face a gap in coverage until Medicare kicks in at age 65. You can enroll in COBRA, the law that provides temporary continuation of an employer's group health coverage for up to 36 months. It will allow you to receive the same coverage you had when you were married, but the cost will likely be substantially more than it was before the divorce, so be sure to plan for that additional expense if it applies to you.
Save, save, save. Divorce is an expensive life change, and if you’re already feeling apprehensive about your financial outlook at retirement age, you need to take this into consideration. Create a budget and start putting as much money aside as possible. Consider downsizing, cutting back on extraneous daily expenses, and/or working longer before drawing Social Security benefits.
Cultivate a support network. If you’re active and healthy now, you may not require the support of others for many years to come. But it never hurts to put your network in place ahead of time—you shouldn’t wait until you need help to figure out who can assist you. If you aren’t surrounded by a sufficient support system of friends, family, and neighbors, research senior support organizations in your area and find out what services they can provide.
Get out of the house. You may have to put more effort into creating and maintaining friendships once you no longer work, as well as after your marriage ends. One great option is to take classes on topics that interest you. Not only will you enjoy the mental stimulation, but you’ll meet others who have similar interests. Your health is critically important, so consider joining a gym, taking group exercise classes, or joining a walking club. And remember, you don’t always have to have someone with you to eat dinner out or go to a movie. Learn to embrace the idea of taking yourself on a date every now and then.
Set new goals that excite you. Think about your new life and set goals for every facet of it: finances, lifestyle, health, personal growth, and relationships, among others. Now that you’re the architect of your own new life, what would you like to build into it? Whether you want to apply an old passion to an encore career or take a solo vacation abroad, life is yours for the making. It’s never too late to pursue your dreams.
If you’re divorcing and approaching retirement, be sure to add a qualified financial planner to your professional team. A financial professional can help you prepare for unforeseen fiscal shortcomings that often come with gray divorce, as well as offer guidance as you plan for your bright new future. Our friendly, knowledgeable advisors are always ready to help. Please contact us to learn more.
About FAI Wealth Management, Inc.: Located in Columbia, Maryland, FAI focuses on helping clients create the financial future they desire by protecting their wealth, making the most of their assets, and planning for life's uncertainties. The firm combines fee-only, fiduciary-driven guidance with highly personalized, consultative financial planning and investment services that enable individuals, families, and businesses to navigate complex life transitions. Founded in 1987, FAI currently manages more than $350 million in client assets nationwide. For more information about FAI Wealth Management, please visit the website at https://www.faiwealth.com or call 410.715.9200.