Insights & News

May 2017

Reclaim Your Finances in the Era of the "Gray Divorce"



The divorce rate of people in their 20s and 30s is falling but baby boomers are divorcing at a surprising rate. In fact, the number of divorces among people age 50 and older has doubled in the last 20 years and those statistics continue to increase.  While experts agree it’s largely the by-product of longer life spans, “gray divorce” is sure to affect retirement lifestyles for many people.

Divorcing in your 50s and beyond can be economically shattering for certain groups of people, such as a spouse who has been out of the workforce for decades while raising the children. But the reality is that gray divorce can have a dramatic impact on the finances of everyone involved. Retirement savings that were planned to be shared as a couple will have to fund two separate households, which costs considerably more. In addition, baby boomer finances are impacted more than those who divorce at younger ages because there’s less time to recoup the associated economic losses. That often means either delaying retirement or choosing a more modest retirement lifestyle than originally planned.

With some forethought and planning, there are ways to retain your financial security despite divorce later in life:

  • When you hire a divorce lawyer, be sure to hire a financial adviser, too. They can work together on settlement that will be as beneficial to your retirement as possible. You might also consider mediation to facilitate a collaborative divorce. In this situation, couples and their lawyers agree to bargain rather than going to court.
  • Decide on a savings approach. Go back to work to increase your savings or scale back on your spending to lessen depletion.
  • Start saving immediately. Regardless of your age at the time you divorce, there’s still time to start rebuilding savings and investments. It will take time but it can be done, so it’s important to start working toward that goal right away.
  • Make your long term financial security a priority. That may mean cutting back on the financial help you provide for adult children or selling the marital house and downsizing to a place you can comfortably afford.  It’s necessary that you make sound monetary decisions and focus on your future.
  • Keep an eye on legal fees. These costs can be significant and they are generally paid pre-divorce, reducing the funds on which you will live. If you divorce after retirement, the associated legal fees are nearly impossible to replace.

Divorce at any age means change. Divorcing in your 50s and beyond requires lifestyle adjustments and that often involves scaling back. But with the appropriate preparation, you can enjoy a comfortable, financially secure way of life in your later years.


IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by FAI Wealth Management), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from FAI Wealth Management. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. FAI Wealth Management is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of FAI Wealth Management's current written disclosure statement discussing our advisory services and fees is available for review upon request.


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