My wife and I have made some major financial decisions during our 38-year marriage, but the most important consequence was staying together.
Few things save your personal finances more than divorce. The closer you are to retirement, the worse the damage.
"You have a couple who planned their entire retirement to look one way," says Nancy Hetrick of Phoenix, a financial analyst in divorce, "and now they have the same money that should make a retirement, have to make two of them. ”
The divorce rate for Americans over 50 began to climb in the early 1990s and has remained above historical norms while prices for other age groups have fallen.
About 1% of married Americans over the age of 50 are divorced each year, says Susan Brown, a sociology professor at Bowling Green State University who has published divorce research. "The picture is quite gloomy," says Dr. Brown.
Especially in a gray divorce you only have one shot to get it done.
" Especially in a gray divorce, you only have one shot to get it done, "says Diane Pappas, a Boston area financial analyst . “The husband and wife need to understand your expenses. The only way to live their ways is to understand what they are spending and how much income they want. “In addition, women are disproportionately financially affected by divorces: The average woman sees that living standards fall by 45% after a split; the average man sees it going down 21%.
Why are women doing so much worse? Carol Lee Roberts, president of the Institute for Divorce Financial Analysts, who trains people in financial divorce planning, has seen many divisions where the man takes the retirement account and the woman gets the house. The result is that the man receives assets to finance his retirement, and the woman is saddled with the maintenance costs and property taxes of a house.
"It's not the best idea to keep a house or any big asset that doesn't give you a revenue stream," says Roberts.
Women who stay home to raise children also often pay a Social Security penalty at retirement. If they did not work enough to qualify for benefits on their own, they would receive half of their husband's insurance if they married 10 years or more.
Another major area of influence when couples split: Many people receive employer-sponsored health coverage through their spouse's employer, and they often lose it in divorce.
"The first problem keeping people up at night is health insurance," said Jennifer Failla, an Austin, Texas, financial analyst. People who lose employer-sponsored insurance can get coverage for up to three years through a federal program called Cobra, but it is expensive.
Failla helps clients find private health coverage to save money, but says they usually end up paying $ 500 to $ 800 a month for poorer coverage than they had previously had with the employee's sponsored plan.
Even upscale couples feel pinch in a separating layer. Justin Reckers, a financial analyst in divorce in San Diego, handled a case where the main source of income, the man, earned more than $ 500,000 a year. The 54-year-old wife had stopped working seven years earlier to raise her children. She received about $ 3 million in assets as part of the divorce settlement, enough to give her $ 7,000 a month for life after taxes, but it fades compared to $ 15,000 or more in the month the couple spent before the divorce.
Hetrick, a Phoenix financial analyst, meets many couples whose romance died long ago, but they stick together because they think they can't afford separate houses. "They don't hate each other," she says. "They're just kind of roommates and have been there a long time."
When a couple comes to prepare for divorce, planners usually make two lists. You have all their income; the other all your expenses. "Especially in a gray divorce, you only have one shot to get it done," says Diane Pappas, a Boston-based divorce financial analyst. “The husband and wife need to understand your expenses. The only way to live their ways is to understand what they are spending and how much income they want. ”
Dads sometimes advise people who are still on the fence about divorce. She recently spoke to a couple in their late 60s who had collected $ 3 million in assets, but the man felt he didn't have enough to retire. That reluctance to retire led to friction with his wife, who wanted to "start enjoying life."
She told the man that he could afford to retire. That's how he did it, and the couple is still together.
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