According to several studies, currently, more than a third of all U.S. divorces are “gray divorces” – that is, involve couples who divorce after the age of 50. The financial impact of such divorces is significant, particularly for older women who can see their standard of living decline by 45% compared to 21% for men. It can be hard to make up for financial losses that occur with gray divorce but a few strategies can help:
- Hire an experienced divorce lawyer and financial expert. You should get professional advice to help you understand your rights and obligations regarding the division of assets and spousal support and explain the impact of any settlement offers on your finances after divorce. A certified divorce financial analyst (CDFA), forensic accountant, tax professional, and/or financial planner can assist in valuing assets, determining your financial needs, calculating taxes, and providing other financial advice.
- Create a budget and monitor income and expenses closely. Maintaining a household as a single person is more expensive than for a couple. As a result, you may significantly underestimate what you can afford. The key is to take control of your daily finances. You must understand your cash flow and cost of living. Start reviewing how much you spend every month and on what items. Set goals for savings and to pay off debt and develop a budget to keep you on track.
- Improve your financial literacy. If you weren’t responsible for financial matters while married, it may be a struggle to suddenly take on that role. Financial literacy is relatively poor in the U.S. under the best of circumstances but when an older adult is facing divorce, the consequences of not knowing how to manage money can be devastating. There are free resources available online that you can use to educate yourself on the basics of budgeting, investing, saving, credit, and debt. Even if you hire a professional to assist you with your finances, it is a good idea to learn about money management so you can feel confident about the people you decide to work with and the decisions you make.
- Update your retirement plan. The problem with gray divorce is that there isn’t much time to save more money for retirement. At the same time, at an older age, you may be facing higher expenses, not only to support a separate household. Many older adults are also helping out their adult children and/or parents financially. Further, many women have additional struggles because they may have been out of the workforce for an extended period, tend to have lower wages and social security benefits, and have a longer life expectancy. As a result, it is important to talk with a financial planner to reconsider how much you need for retirement and develop a plan, including possibly working for more years or reducing expenses to ensure you have enough.
- Try to take emotions out of financial decisions. It can be hard to prioritize financial issues if you are still dealing with the grief, anger, fear, and loneliness of divorce. Don’t take significant steps, like selling off assets out of fear of poverty or keeping a too-expensive home for sentimental reasons, without thinking through the implications and talking with a professional. Also, consider counseling, a support group, or other assistance to help you move forward emotionally in your new life.
A daily money manager can be one of the financial experts who can help you successfully navigate a gray divorce. I have assisted many newly divorced clients by teaching them to manage their money and/or tracking and handling their daily finances for them so they can feel more secure in their financial future.
To learn more about my services, contact me for a free consultation.
