In California, going through a gray divorce involving couples aged 50 or older can involve significant financial challenges for one or both partners. In addition to the financial complexities of dividing assets, spouses must deal with the emotional challenges and other implications, which become more significant when couples have spent years or decades together. Consider the following points when strategizing how to protect yourself financially while going through the divorce process and afterward.
Navigating new terrain
Strive to understand the new financial reality after your gray divorce. Older couples dividing assets and creating new financial lives as singles must prepare for and deal proactively with issues such as a reduced financial cushion, less equity in their home and potential market volatility for investments. The long-term shifts in each spouse’s financial affairs can cause confusion and emotional challenges for the couple and their family or support system.
Communication is key
Couples that did not communicate openly about their finances while married may find that at least one partner is surprised and unprepared financially for life after divorce. It is crucial to have open conversations about marital assets, debts and other financial obligations so that both partners understand where they sit financially.
Prioritize planning for health and longevity
With increased life expectancies, you may need to factor in a longer time horizon for retirement while also accounting for the rising cost of health care. Other financial decisions to revisit due to a longer life expectancy include when to start taking Social Security payments, which increase the longer you wait. Additionally, consider any other changes to your expected cash flow, such as IRA distributions, since you may have to split the account.
Adjust retirement expectations
When couples divorce shortly before retirement, their plans for a particular retirement timeframe and lifestyle may require significant adjustments. Detailed planning and projecting costs and divorce-adjusted expected cash flows during retirement can help rework expectations. Some people may need to retire later or re-enter the workforce to afford the lifestyle they want or need.
Approaching gray divorce with a proactive mindset provides more control during a challenging time. You can reduce financial stress and build a more secure post-divorce financial future with the proper steps.