Later-in-life divorce has become common, but it presents financial challenges to the over-50 set that younger people do not have.
If you are facing a “gray divorce,” be sure to consider the long-term financial picture and how it will affect your future.
A changing lifestyle
In a post-divorce world, you will have half the income and assets you had during your marriage and that fact alone will affect your lifestyle. You may have to make do with less and live on a tighter budget. The fact is that you must manage your altered financial state now so that you will not outlive your assets and income.
About the house
The marital home can be a stumbling block in the property division phase of the divorce. You may want to keep the house but remember that this is an illiquid asset that can reduce your cash flow. A house requires upkeep, property tax payments, and, in many cases, mortgage payments that will remain after the marriage ends. You may be better off with an asset such as a 401(k) that continues to grow.
Keep in mind that there will be tax consequences when dividing assets. Learn how taxes will apply with respect to alimony and be sure you understand how this will affect the income you anticipate receiving after the divorce.
A look ahead
After being part of a couple for so many years, going out on your own will not be easy, especially if you are over the age of 50. As long as you understand what you face as an older person and have a good grasp of your finances, you can enter this new stage of your life with greater confidence.