Getting divorced at any age puts a bit of a strain on your financial life. Even if you’ve planned well and have ample resources, suddenly splitting those resources in two at a time when other emotional stressers are occurring can be difficult. If you haven’t planned ahead or don’t have a good handle on your finances, divorce can throw everything wildly out of whack. This is especially true for individuals who experience divorce close to retirement, because they have less time to recover from the sudden shift.
The American Institute of Certified Public Accountants looked at some cases of divorce that occurred in later life to see if there were lessons that could be learned. According to their study, 75 percent of individuals who divorce later in life would benefit from a better understanding of how to manage personal finances. During or just after a divorce isn’t the ideal time for educating yourself about such matters, so it’s a good idea to start now. No matter what path your marriage or life takes, good personal finance habits can help.
The AICPA believes that 50 percent of the people in the study would have benefited from saving more for retirement. You might think that there’s no reason to plan for savings if you are going through a divorce — or you might worry that your retirement savings would be put at risk in a divorce. It is true that your savings can be part of property disputes during a divorce, which is why working with an experienced lawyer to protect your interests is important.
Other thing the AICPA said would have benefited those in the study included prenuptial agreements, long-term care insurance, increased savings, decreased spending and selling assets before finalizing the divorce. Before you make major financial or legal decisions before, after or just following a divorce, talk to your lawyer and other professionals about your options.
Source: Marketwatch, “Money lessons from a divorce: How to be smarter with your finances,” Alessandro Malito, Feb. 10, 2017