A sobering statistic: divorce has become twice as likely for couples over 50 in the last fifteen years. Furthermore, two of every three of these divorces are filed by women.
Another sobering statistic: for women over 50 who divorce, household income falls by 41%, but men lose only 23% of household income. Obviously, most of the women over 50 who get divorced have relied on their spouse for support, and the consequences of starting over after 50 can be severe financially.
What should a woman in this situation do to protect herself?
First, she should take a full financial inventory. Find out all marital assets and debts. On the asset side, know not only retirement account balances but also everything to know about the spouse’s employment, including potential bonuses, benefits, stock options and the like. Also, how long does the spouse anticipate continuing to work? On the debt side, examine for sketchy credit card debt or other strange items that show on a credit report.
If the bulk of the assets are in retirement benefits and equity in the house, that does not leave a very liquid estate. But that may not be a bad thing, because women over 50 should be thinking long-term – providing security for retirement when they earn substantially less than their spouse.
Second, consider downsizing. If the women over 50 earn much less, they should not continue the same lifestyle if they cannot afford it. It is possible the court could award maintenance to cover some of those lifestyle gaps, but maintenance will not go on forever. Indeed, in Missouri, courts consider maintenance a step toward self-sufficiency, not a permanent means of support. Trading long-term assets for maintenance could be an unwise financial decision. If the woman downsizes and takes smaller maintenance for a larger chunk of the retirement assets and the equity in the house, the woman now has an instant nest egg and a level of financial security it would be hard to replicate on her own through employment.
Third, speaking of the house – consider selling it. Rarely at this stage will it make sense to keep the marital residence. It usually will make more sense to take the equity and start anew in a sensibly priced home.
Fourth, reexamine your work options. If you have not been working full time or to full potential, the court will expect you to at some point, so start planning early rather than later.
Finally, do not forget about health insurance and long-term care insurance. Once people pass 50, the gap between 50 and 65, when Medicare benefits begin, can be scary. An illness can bankrupt some people if not fully insured. Make sure that you have coverage and that if you cannot afford it your spouse will be required to pay it. Long-term care is especially important to plan for now while policies would be less expensive.
If you are a woman over 50 thinking of divorce, know that you have special financial considerations that you have to consider before finalizing your divorce.
If you have questions about gray divorce and financial security, contact us – we can help.