Many married couples live comfortably for years without thinking much about how much they have saved for retirement. If they get divorced, as couples over 50 are increasingly doing, and they have to divide up their assets, they often realize that they’ve been spending too much and saving too little.
Many Americans reach that realization as they get closer to retirement. However, when you’re suddenly faced with living on roughly half the income you’re used to while maintaining your own home, the financial consequences of inadequate planning can be particularly serious.
Financial planners note a number of things that they’ve found with their divorced clients and have some advice based on their experience to help people better prepare for the potential of retirement years without their spouse.
— Over 75 percent say that people should learn how to better manage their finances.
— Some 73 percent say people should understand the long-term consequences of their divorce.
— Almost 57 percent say they should understand the tax implications of their settlement.
— Over 50 percent recommend increasing retirement savings.
— Almost 43 percent recommend reducing spending.
— Over 36 percent suggest getting a prenuptial agreement.
— Over 19 percent recommend getting long-term care insurance.
— Almost 18 percent recommend selling off high-value assets like real estate before the divorce settlement is final.
Many of these recommendations are wise whether you and your spouse live out the rest of your lives together or call it quits. If you’re already at the stage where you’re contemplating divorce, even if you haven’t always made the wisest financial decisions, or you’ve left those things to your spouse, it’s never too late to make wise decisions regarding your divorce settlement. In addition to having an experienced family law attorney on your side, it’s a good idea to consult with financial and tax professionals as well.
Source: MarketWatch, “Money lessons from a divorce: How to be smarter with your finances,” Alessandra Malito, Feb. 10, 2017