Atlanta Financial Blog

Gray Divorce is Rising

Gray Divorce Is Rising. What Could That Mean For You?

Cathy C. Miller, MBA, CFP®, CRPS®, CDFA™
March 19, 2019

“Gray Divorce,” or divorce among couples 50 or over, has risen dramatically over the last few decades, more than doubling since 1990 according to a Pew Research Center report. During this same time period, the divorce rate overall has fallen. So why are we seeing such a spike in the divorce rate for older Americans?

Reasons cited include:

– Longer life expectancy and better health – The prospect of a long life ahead can lead couples who are unhappy to envision and demand more out of life.
– Empty nest syndrome – Without the focus and buffer of children, many clients find they have grown apart and opt to separate rather than continue as a couple.
– Money troubles – If a couple isn’t united in terms of financial priorities, years of financial conflict and the prospect of retirement looming closer can cause couples to throw in the towel.
– Social and cultural changes – The decline of the stigma associated with divorce, coupled with the rise of online dating services can reduce anxiety about the process and prospects “on the other side.”
– Improvement in pay and career options for women – With advancements in the workplace, more women unhappy in their marriages feel empowered economically to make a change.
– Other causes – And of course there are the other usual causes impacting all age groups, such as addiction and infidelity.

If you find yourself part of this growing trend, what should you know?

• Get Realistic. It’s extremely important to be realistic about your financial situation, both in terms of income and expenses, and assets vs. debts. Understand that your expenses won’t drop in half just because you divorce. If you are seriously contemplating a divorce, it’s also important to understand the likely RANGE of outcomes for a settlement. Spending some money on legal consultation and working with an advisor to understand your possible outcomes and future needs is a critical step in approaching an imminent divorce with confidence.
• Don’t Rush Changes. If you believe a divorce is likely, don’t make any major financial changes prior to getting advice. If you feel burdened by debt, don’t rush to pay it off outside of a negotiated settlement. The unintended consequence may be to reduce your share of the marital estate or cause you to lose negotiating leverage.
• Do Your Homework. Understand all retirement benefits available to you and your spouse, including long-forgotten pensions, retirement accounts and Social Security benefits either of you may be entitled to.
• Don’t be House Poor. Often, especially if children are still at home, one spouse may make retaining the marital home their top priority. Have an advisor assist you with understanding what level of housing expense is sustainable long term. It is especially dangerous to use alimony to offset housing expenses you couldn’t afford otherwise. What will you do when alimony ends?
• Look Long Term. Don’t focus on a settlement that solves current cash flow problems at the expense of the long term. How will you live in retirement? If you will receive alimony, you may need to carve some of that off for savings to build investments that can sustain you when alimony (and employment) end.
• Be Tax Wise. Make sure you consider taxes in structuring your settlement and accessing funds. Rely on a financial professional to help you with this aspect of the settlement.
• Don’t Forget about Insurance. Insurance issues can be especially important. What happens to your alimony or child support if your ex-spouse becomes disabled or dies? Make sure your agreement addresses these risks.
• Get a Pre-Nup. If your marriage does end in divorce, before remarrying be sure to have a pre-nuptial agreement in place. The financial trauma of a second divorce can be extremely difficult to overcome.

While no one enters into marriage expecting to divorce, especially after a decades long relationship, often it is the right move. Remember the words of caution above. And most importantly, get excellent legal and financial advice before starting the official process and all along the way. Contact me at 770-261-5382 or cmiller@atlantafinancial.com if we can help in any way.

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