While fewer Americans, overall, are divorcing, the rate of divorce for married couples over 50 is increasing. The impact of “gray divorce” is particularly significant for women, and it is important for divorcing spouses nearing retirement to protect their futures.
Priorities for spouses facing gray divorce
Because couples over 50 are nearer to retirement, their priorities in divorce settlements will be different from their more youthful counterparts.
Do not rush into any final decisions
While both spouses may wish to get their divorce proceedings over as quickly as possible, doing so may be disastrous, particularly for the female partner. History suggests wives usually outlive their husbands, so it is imperative for women to ensure that their divorce settlements will adequately provide for their retirement years.
Obtain all financial records
While it may add to the time required to resolve a divorce action, the best interest of divorcing spouses is served by allowing adequate time to obtain all financial records. Sometimes, the partner initiating the divorce might hide assets. This is especially common when the individual managed the finances during the marriage. If you are in the dark about finances, it may help to hire a forensic accountant. You want to protect your deserved settlement.
Correctly determine your priorities
While there may be sentimental value in your home, prioritizing your primary residence in a divorce settlement may be something you want to think over. Houses are illiquid and require pricy upkeep. Moreover, homes do not appreciate in value at the same rate as other investments such as a 401(k).
Take into consideration tax burdens
When dividing any taxable brokerage account, spouses should consider their potential tax burdens. Once the stocks in these accounts are sold, the party holding ownership will be responsible for capital gains taxes. The amount due in taxes should be taken into consideration in any divorce settlement negotiation.
In general, divorcing spouses should reflect deeply on their financial status. Ample consideration and planning will be rewarding in the future.