In 2009, 25 percent of all divorcing couples were baby boomers. Twenty years ago, boomers made up just 10 percent of divorcing pairs. Dividing a couple’s assets and income when they are so close to retirement creates challenges that younger divorcees are unlikely to face.
Financial planners suggest that all couples, whether they are getting divorced or not, have a financial plan. Working backwards from retirement age helps them understand how hard they will have to work and how much they will have to save to be ready to retire when the time comes. For many, the Great Recession has diminished the value of their real estate, investments and retirement accounts. Understanding the role each of these assets plays in a long-term plan can help each spouse formulate a property division that makes sense.
Preparing a post-divorce budget helps a husband and wife compare the marital income and household expenses with the income and expenses of living on their own. Seeing the numbers in black and white can reveal a shortfall that could mean that one spouse will have to pay support to the other, at least for awhile, or that both spouses will have to find a way to earn more income when they split by working a second job or working more hours.
Taking stock of the big financial picture before the divorce process begins may help ease both spouses into their post-divorce lifestyles. Facing the reality of living separately may motivate the couple to try to divide the marital estate amicably.
Source: Fox Business, “Graying divorces: What boomers need to know to protect their assets,” Andrea Murad, May 25, 2012