“Grey Divorce,” the term used for the divorce of couples who have been married for decades, is increasing, thanks to a few external factors. Life expectancy is increasing, meaning couples are forced to stay together longer than ever; women are becoming more independent; and cultural values have changed. Divorce is simply more socially acceptable than it was a decade or two ago, and Baby Boomers are taking note.
For women in this category, the financial considerations are unique. Many women of the “grey divorce” generation were not part of the push toward women in the workforce, or especially toward women earning higher wages, as younger people who might be getting divorced were. At the same time, they have often accumulated sizable assets over their many years of marriage.
Age also plays a factor. Aging women could require more financial stability post-divorce than younger women, whether for health reasons or otherwise.
Here are a few areas where finances are especially important for older women going through a divorce, and tips for how to manage:
1. Business
Divorce can derail a business, as in most states the value of the business will be included as part of your assets during a divorce. In many cases, your spouse will receive 50 percent of your business (or its value), which could be catastrophic to its future success. If your spouse was part owner of the business, they may also have a say in what happens to it going forward. One solution is to buy out your spouse’s portion of the business over a long-term payout, usually with interest.
2. Retirement
It’s likely you and your spouse have accrued savings in a variety of retirement accounts, from pension plans to IRAs. Your divorce settlement should clearly state how these assets will be split. Federal laws, state statutes and tax considerations all come into play. Don’t make the mistake of thinking your divorce settlement will automatically protect your interests or give you half of your spouse’s retirement account. Your attorney may work with a qualified domestic relations order (QDRO) specialist, who can ensure you’re receiving your entitled portion.
3. Insurance
If you’re currently on your spouse’s insurance plan, that will change. Look into health care options through your work or through the Affordable Care Act or Medicare, as well as private insurers. Health insurance, property insurance, and disability insurance can be costly, but are all important. If there are any major procedures you need taken care of you might want to consider fitting those in before your divorce is final, especially if your insurance on your own will not be as comprehensive as that of your spouse’s. If you will be receiving alimony or child support, make sure the divorce settlement includes a provision for life insurance as security for your child support or maintenance award.
4. Finances
In general, you’ll need to be financially stable going forward. Think about your lifestyle and create a budget that will help you see how much money you’ll realistically need year to year. Don’t forget to include retirement savings in the budget. If the divorce settlement doesn’t provide enough assets to cover this budget, you may need to liquidate assets or take up a new job. A divorce financial planner can show you how long your assets will last, and help you make any tweaks necessary.
5. Beneficiaries
Once your divorce is finalized you should update the beneficiaries on all of your retirement accounts. Otherwise, your ex-spouse could be eligible for some of the funds. Children, grandchildren, or nieces and nephews are usually safe designations.
The financial realities of grey divorce can be complicated, but a good divorce team filled with knowledgeable attorneys who care about your well-being and a financial planner with experience in these types of divorce can make the process much easier. With their help, these next decades could be your best yet. At Schiffman Family Law, we want what’s best for you. We’re a small, family-owned law firm that works personally with each and every one of our clients. Schedule a free one-hour consultation with Mike Schiffman today.