Over 65? How to know if you can afford a ‘gray divorce’
If you’re 50-60 and have been contemplating divorce, it may be time to go over some of the drastic changes you’ll each have to make. After half a lifetime spent together, it’s important to understand the value of all your assets and how you’ll want those divided. Depending on your employment status and how amicable the separation is, this may make or break your financial standing for the future.
You might even consider entering into a post-nuptial agreement for this very reason, to help you both understand what a possible divorce could do to your savings if the relationship does not improve. Divorce at any stage is difficult, but you’ll want to be safely and legally prepared for any possible outcomes.
WASHINGTON — Later-in-life divorces dubbed “gray divorce” have more than doubled since 1990 among couples who are 65 and older, making up 25 percent of all Americans who divorce after the age of 50.
The rise in gray divorces during the past decade has caused significant financial strains for parting couples and especially for women who are more vulnerable to the financial risks.
It’s true that waiting until the children are grown means you won’t have to deal with child custody issues. But divorcing after 50 requires greater consideration of how you will maintain your new single life without jeopardizing your retirement years. There simply isn’t as much time to rebuild your asset base when divorcing in the second half of your life.
Although each divorce has unique characteristics and challenges, there are some common risks for those facing a gray divorce. By knowing the risks and taking the suggested precautions, you may be able to soften the blow. Here are a few important questions to consider.
Can you afford to keep your family home?
When deciding to split, you may have to come to terms with the potential of a lower standard of living.
One of the main reasons is that in long-lasting marriages, often a substantial amount of wealth is tied up in the family home. If one person wants to stay in the home, they are required to forgo retirement or other assets in exchange. Although there may be sentimental reasons to want to retain the residence, we find many divorcees simply cannot afford the maintenance and tax costs of keeping the home once they’re single.
If you’re contemplating or negotiating a divorce, we recommend that you carefully compare all living options and be realistic about your ability to stay in your home. It’s not comfortable to be house rich and cash poor.
We also recommend that if you’re considering a drastic change in lifestyle — i.e., relocating or moving from the city to the country — you try out the new lifestyle by renting before committing to a purchase. Divorce requires significant changes and can sometimes lead to rash decisions about a new lifestyle that doesn’t play out as originally planned.