Grey divorce, otherwise known as divorcing when you’re 50+, is becoming increasingly common. As the average age for marriage is getting pushed back later in life, so is the average age for divorce.
Divorce at any age is emotionally and financially strenuous, however, getting divorced later in life comes with new challenges you might not have considered. Divorce can seriously affect your savings, so if you’re divorcing close to your retirement you’ll likely need professional help to keep your financial plan on track.
Long-term marriages almost always result in alimony after divorce. Since grey divorces happen later in life both partners are often past their peak earning years and approaching retirement, resulting in one spouse usually needing long-term alimony to compensate for their limited income. As well, if your grey divorce is ending a long-term marriage, which it commonly is, it rules in favour of long-term alimony.
Whether you are the spouse paying alimony, or you are the spouse receiving it, chances are you will both likely have to readjust your lifestyle. Both of you will need to live on less while still saving for retirement. Once your alimony agreement is in place, meeting with a financial advisor, sorting out your new budget, and reorganizing your financial plans are all key steps to helping you achieve the retirement you planned for.
The Family Home
Many people, women especially, don’t want to give up their family home during divorce, but it could be financially smart to do so. If you take the house, your ex gets something of equal value – that could be a larger chunk of your shared pension or smaller alimony obligations. Sometimes it’s better to sell the house and downsize rather than maintaining the sentimental family home that will stretch out your budget. Property taxes, maintenance, and new debt are also reasons you might not want to buy another house after the divorce.
A financial advisor can help you sort out what’s in your budget and whether or not fighting for the family home is a good investment for you.
Start Saving More, Spending Less
With any divorce one thing is fact: they’re expensive. You’re going to have to readjust your lifestyle and learn to live on a little less. As a couple, you shared a lot of expenses that you will now have to pay for alone, and this can increase your living expenses more than you realize. What’s vital is that your grey divorce doesn’t damage your retirement savings. To boost your savings you may have to increase your annual contributions and cut back on spending. An advisor can help you work out what your new financial plan will look like, mapping out savings goals that will help you understand how much spending money you can afford.
This might not be an answer you want to hear, but it’s the reality for many people. If there is less money to go around, you might have to work an extra few years. If not full time, you could continue to work into your retirement years with a reduced work load or work week. Working an extra few years like this may not be as planned but it may be necessary to helping you fund your retirement.
If You Decide To Remarry, Consider A Prenuptial Agreement
If you decide to get married again, you may want to consider a prenuptial agreement. Statistically, remarriages are more likely to end in divorce than first marriages, so it’s important to safeguard your finances. If your retirement fund has already been split in half once, you want to make sure it doesn’t happen again. As well, if you have plans to leave money or assets for your children, a prenup can ensure your wealth is passed down to the next generation.
The idea of divorcing later in life is discouraging to many as they worry it will ruin their retirement plans, but with the right help you can get your finances on track and still manage to retire on your own terms. Living your life authentically is what will make for a truly happy retirement.
All in all, this life transition can be overwhelming and the financial challenges that come with it need to be addressed head on; however, with organization and professional help you can regain confidence in your future and maintain a stable financial plan.