Divorce Later in Life: Financial Guidance for People Over 50

Although overall divorce rates have declined over the last three decades, the rates for couples 50 and over have increased. Divorces in this age group—sometimes labeled gray divorces or silver splitters—show no signs of slowing down. There are several contributing factors to this trend, including an aging population, healthier and more socially engaged adults, an increase in the average age of marriage and reduced social stigma around divorce.

Regardless of the underlying causes, gray divorces come with their own set of financial obstacles and solutions. Whether you're considering or finalizing a divorce or in the process of separating, respond to the challenges ahead with a definitive action plan so you can be better prepared for the next phase of your life.

Enhance your financial expertise

If your ex-spouse handled the bulk of the finances in your household while you were married, you'll likely need assistance managing the various elements of your new portfolio. Factors such as liquidity, risk and tax implications should be addressed as you establish your own goals, preferences and tolerances.

Your understanding of these items and active participation in their management are also critical to your long-term financial well-being. This is an area where a wealth advisor can help you translate your new long-term goals into a step-by-step action plan that adheres to your personal financial preferences as a newly single person.

Take inventory of your financial life

By nature of their timing, divorces later in life leave little time to offset any financial setbacks prior to retirement. As your divorce proceeds, it's prudent to review and revise all components of your financial life, such as monthly budgets, savings and retirement nest eggs, and housing and healthcare costs.

Be mindful of long-term results

It's crucial to aggressively pursue your long-term goals. You'll want to do your best to reduce expenses and increase savings to make up for the financial shortfalls that may occur during the divorce with the various legal, accounting and relocation costs involved.

The increased costs of living single—along with other expenses, such as spousal or child support payments—will need to be offset by a reduction in discretionary expenses, such as vacation plans or a child's private school tuition. Understandably, these aren't easy decisions. Working with an experienced wealth advisor can provide the guidance needed to pursue your top priorities within these new constraints.

Redefine your role in a family business

A divorce doesn't automatically force the sale of an established family business, so couples should carefully consider their next steps. Depending on the stability of your relationship with your ex-spouse and your willingness to continue working together, there may be several options to choose from, such as:

• Continuing to operate the business with a co-ownership arrangement
• Splitting the business into two separate entities, with each spouse running their own portion
• Selling outright to a third party
• Implementing a full buyout of a single spouse

Consider re-entering the workforce

After discussing your financial status and plans with your wealth advisor, you may discover that increased expenses and decreased income after a divorce may require a return to work. If you've been out of the workforce for a long time, looking for full-time work can be a daunting task.

The good news is a full-time position may not be necessary once you've established your new financial plans. A part-time role may offer enough income to allow you to pursue your new financial goals. And part-time positions are often more accessible—especially when you may be re-entering the workforce after an extended period. After you've established your new financial plan and fully understood your income needs, pursuing a career that incorporates your skills and professional interests can become a fulfilling part of your next chapter.

The bottom line

Navigating the financial nuances of divorce later in life can be a confusing and emotional process filled with uncertainty. Working with a wealth advisor can introduce some clarity and stability to the situation by helping you thoughtfully plan the financial portion of your life ahead.