Grey divorce is a term referring to the demographic trend of an increasing divorce rate for older (“grey-haired”) couples who often have been married for many years. A very public example of this was Tipper and Al Gore’s 2010 decision to divorce after 40 years of marriage. Statistics from the National Center for Family & Demographic Research demonstrate the increasing prevalence of grey divorce in the United States. This incredible phenomenon is what led me to author How to Survive Grey Divorce. This book sets forth the complexities of a late-in-life divorce and provides guidance with regard to working with a family law attorney as well as other professionals.
I wanted to take the opportunity of this blog post to highlight the most difficult aspect of these grey divorce cases: MONEY.
The dividing up of assets and the payment or receipt of financial support changes everyone’s life plans and as a result, it is critical that each party work not only with their lawyer, but with a financial advisor. Here is a checklist of issues to be reviewed with your lawyer and financial advisor:
- The house, which is usually not thought of as part of one’s financial plan, must now be viewed in that new light. How can the house factor into your future financial plan?
- What housing expenses can you afford after the divorce?
- Will it be necessary or maybe even desired to downsize your housing?
- What are the cost differences between renting and owning a home, including the tax consequences?
- Is it a better long-term investment plan to rent or own a home?
- Is it a better long-term investment plan to own a home or investment property?
- What are the percentages of liquid vs. non-liquid assets in what you own?
- Is your retirement plan still viable? Do you need to rethink what your retirement will look like in terms of timing, expenses and location?
- What assets are you best off keeping in order to support your retirement?
- How will you be able to rebuild your savings after the division of assets?
- Will you need to return to work, or delay your retirement?
- Will you need to reduce your lifestyle?
- What health expenses should you expect as you grow older – and how will you meet them?
- What sources of income can you expect (i.e., investment income, support, social security, retirement plans) and will they be adequate?
Getting divorced is one of the most frightening parts of anyone’s life because of the unknown future consequences. This situation is far greater when the divorce occurs late in life because the spouses have fewer remaining years in which to recover financially and emotionally. Therefore, planning with the help of a professional is the best course to follow. As stated by Samuel Johnson in James Boswell, Life of Johnson (April 18, 1775, Act 66), “Knowledge is of two kinds, we know a subject ourselves, or we know where we can find information upon it.” Your financial advisor and your lawyer have the information that will help you prepare for your life beyond grey divorce.