Even though research indicates that the overall rate of divorce is on the decline, the rate of divorce for couples over 50 is on the rise. There is no doubt that a divorce can have a significant impact on one’s way of life – especially when it comes to their finances.
Studies show that managing the financial aspects of divorce over 50 comes with unique challenges. Therefore, there are particular financial considerations that older individuals must make when they move forward with divorce.
Take an inventory – and take it seriously
In a divorce involving high assets, preparation is one of the most crucial steps. Being prepared not only helps to alleviate the stress of the asset division process but also allows individuals to protect their property.
That is why individuals need to create a detailed inventory of their property. This is particularly essential for individuals over 50 so they can:
- Determine what is separate property and what is marital property
- Assess the many assets couples acquired over time
- Determine how much certain assets appreciated over the years
This means individuals must classify and evaluate all assets, from furniture to stock investments. Spouses should consider working with a financial professional or attorney during this process.
Earning power v. property division
One of the reasons divorce over 50 is harder on one’s finances is individuals are often closer to retirement. At this stage in life it is common for individuals to have:
- Collected more assets, including their retirement fund, which they now must divide equitably
- Lower earning capacity as they near the end of their career
Dividing property while protecting one’s financial future in these situations requires a delicate balance, and individuals must keep these two factors in mind.
Note: Women must be particularly careful
Even though one of the reasons for the rate of elder divorce is women’s increasing financial independence, research shows that women tend to face higher financial risks as well. This is often because divorce has a greater financial impact on one’s standard of living and earnings at this age.
Of course, this is not the case for every woman pursuing a divorce. Even so, women over 50 should still consider this risk carefully.