Divorce is a challenging life event at any age, but for those in their 60s, the stakes can be even higher. In Australia, the phenomenon of ‘grey divorce’ – the breakdown of marriage among couples in their 50s, 60s, and beyond – has risen significantly in the past two decades.
The emotional toll of divorce is undeniable, but it’s the financial consequences that can be particularly daunting for those in their later years. Costly legal battles can deplete savings and assets that took a lifetime to build.
Here’s how to handle your finances if you find yourself getting divorced later in life.
Seek professional support
Don’t go through divorce alone. Engage a reputable legal and financial adviser, especially if you haven’t been the primary decision-maker regarding finances in your marriage.
These professionals can offer personalised guidance tailored to your specific circumstances to ensure a fair settlement. They will help you navigate the legal and financial intricacies of the divorce process and help shield you from confrontation with your ex-partner.
Assess your financial situation
Start by compiling a comprehensive list of your assets. These may include:
- real estate (such as your home, rental properties, holiday homes)
- vehicles (cars, motorcycles, boats)
- investments (stocks, bonds, mutual funds, retirement accounts)
- cash and bank accounts (checking, savings, certificates of deposit)
- personal property (jewellery, art, collectibles)
- business interests (if applicable)
- any other valuable possessions.
As you list your assets, include details such as their current market value, purchase price, and any outstanding loans or mortgages associated with them.
Also, list things that are valuable to you emotionally, such as family photos, heirlooms, special home decorations, and treasured items. Even though these things may not be worth much in money, they mean a lot to you personally.
Next, list all your liabilities or debts. These may include:
- mortgage(s) on your properties
- auto loans
- credit card debt
- personal loans
- student loans
- business loans (if applicable)
- any other outstanding debts.
For each liability, note the outstanding balance, interest rate, monthly payment, and creditor information.
Be transparent with assets
Attempting to hide assets can lead to legal penalties and is unfair to your partner. Aim for a transparent and equitable division of assets.
Consider the net value of assets
When dividing assets, focus on their net value after taxes. Receiving assets that require selling can result in a lower-than-expected financial return once taxes are accounted for.
Build a support network
Don’t isolate yourself. Share your situation with trusted friends and family. Their support can be invaluable during this difficult time.
Rethink the family home
Holding onto the family home can be an emotional burden and a financial strain. Consider downsizing or renting to free up funds and facilitate a fresh start.
Review your budget as a single person
Transitioning from a dual-income household to a single-income or reduced-income situation requires careful budgeting. Create a detailed budget that accounts for your essential expenses, including housing, utilities, healthcare, and insurance, while also setting aside funds for savings and discretionary spending.
Based on this, assess which assets can generate the income you need. You may find you will need to supplement your income with part-time work. But having this knowledge means you can enter the divorce assets division with an understanding of your needs and not act emotionally.
Check your retirement plan
Divorce later in life can significantly impact your retirement plans. Reassess your retirement goals and adjust your savings and investment strategies accordingly. Consider factors such as changes in income, healthcare expenses, and the division of retirement accounts to develop a new retirement plan that aligns with your current circumstances.
Prioritise your financial security
You may want to use your finances to help others around you. But it’s important to take a step back. No matter how much you’d like to help your adult children or other adult family members, your priority is to ensure you have a healthy retirement income.
Update your estate plan
Review and update your estate plan to reflect your new marital status and beneficiaries. Update your will, trusts, powers of attorney, and any other legal documents to ensure they accurately reflect your wishes and protect your assets in the event of incapacity or death.
Focus on self-care
Divorce is emotionally taxing, especially later in life when you may be facing additional life changes such as retirement or health concerns. Prioritise self-care during this challenging time by seeking support from friends, family, or a therapist, and engaging in activities that bring you joy and fulfillment.
Have you navigated a divorce in later life? Share your experiences and tips in the comments section below, and let’s support each other through these life transitions.
Also read: Financial adviser on super bequests and later life divorce
Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.
