By Greg Sullivan

Maybe you saw it coming. Maybe you didn’t. Your husband (or wife) comes home and says, “I want a divorce.” Perhaps you think it’s a passing dissatisfaction, or perhaps you’ve known for a while that your marriage really is over, and the moment you’ve been dreading has finally arrived. Maybe you’re the one who initiated the split.

The fact is, it’s happening more and more among Baby Boomer couples. While divorce rates overall have leveled off, and have even begun to decline among some demographics, they’ve risen among Americans over 50 years of age, with approximately 25% of the divorces today occurring among couples who are 50-plus.¹ And when older couples divorce, there is less time to recover from the experience—not only emotionally, but financially as well.

Don’t Bury Your Head

No one wants to look down the road and contemplate the realities of a split, so there can be a tendency to ignore the signs or to put off dealing with the practical details. You have enough to do holding it together emotionally during such a stressful time. But there are steps your financial advisor and other professionals can take to make sure both you and your spouse (and any children you may have) are well taken care of, and the sooner those plans are begun, the smoother the process will be.

In my more than 35 years as a financial advisor, I have received dozens of phone calls from clients who confide that their marriage is on the rocks. Our role, as your financial advisor, is to provide clients with objective information about their finances and the impact different scenarios will have on their financial future—and also to bring some sanity to the process.

Because the dissolution of a marriage is such an emotional topic, tensions can run high even in the most cordial of circumstances. A financial advisor can help people step back and look at their financial options calmly and in a way that will lead them to more thoughtful decisions.

Once a couple has decided to divorce, they begin trying to see their way forward separately, as individuals—and sometimes those individual interests are in conflict. While a couple may have enough in retirement assets to support them comfortably, a split of the assets, paired with the fact that those same assets must now support two households rather than one, can strain the budget and change the realities of the individuals’ lifestyles.

The more complicated the financial scenario and the more difficult the family dynamics, the longer the divorce will take and the greater the emotional toll is likely to be.

Looking at Postdivorce Finances

If you are going through a divorce, start building separate cash-flow statements; each party to the divorce should have his or her own. Look carefully at all the assumptions—lay out the needs for the kids, house, necessities, lifestyle, and so on—and balance them against the assets you have. Put together a project plan for each person that shows how the asset split could work out.

When talking with your financial advisor, make sure to:

• Be honest about the divorce and any circumstances that may affect the settlement.
• Share all the details of your financial information.
• Review and update your estate documents.
• Have a list of future expenses you anticipate.
• Discuss your personal and financial goals, both short term and long term.

Pinning down the numbers is not the hard part; the difficulty comes from working through the analysis during this highly emotional period. In the end, few divorces end with settlements that both parties are completely happy with, but we all hope to arrive at an arrangement that is fair.

There Can Be an Upside

A late-in-life divorce can contribute to a retirement fail if you’re not careful, yes—but the news is not all bad. Remember that, even if you reduce your assets by half and must pay spousal support, the divorce may ultimately be a positive thing. In the end, you and your former spouse may both realize how unhappy you had been and be thrilled to be living independently.

I had clients, a married couple, who were both desperately unhappy in their relationship but were afraid of getting divorced because of the financial implications. After years of misery, they finally agreed it was time to separate. What they came to realize was that, although each had only half the assets, they gained peace of mind, reduced their stress, enjoyed better relationships with their adult children, and found new freedom to be themselves.

No matter your age, divorce is an unwelcome topic. Whether it comes as a surprise or has been brewing for years, the breakup of a marriage creates upheaval in your life and in the lives of your children, other family members, and even friends and community members. And when you’re older, there are challenges that don’t appear (as much) for younger people. Priorities are different. Life experience is different, and your expectations for what lies ahead are different.

With a little foresight, you can prepare for the consequences of a divorce, and, if that time should come, be prepared to put a strong plan in place that ensures both you and your former spouse are well provided for.

Cheers,
Greg

To learn more about Greg or want discuss retirement visit, SBSB Financial Advisors. 

1. Abby Ellin, “After Full Lives Together, More Older Couples Are Divorc-ing,” New York Times, October 20, 2015. Accessed April 23, 2017. https://www.nytimes.com/2015/10/31/your-money/after-full-lives-together- more-older-couples-are-divorcing.html↩