The general consensus is that the hardest years of marriage include sleepless nights of crying babies, overstretched schedules, balancing work and home life, and the stressful planning of finances. Once the shared goals of raising kids and making it to retirement are achieved, life is smooth sailing, right?
Actually, an increasing number of couples are turning to divorce after completing the journey of raising children. Gray divorce refers to couples divorcing after 20, 30, even 40+ years of marriage. Below are four considerations for those going through, or exploring the option of, a gray divorce.
- Time Doesn’t Make it Easier – After decades of marriage, a couple’s emotional, physical, and financial lives are completely intertwined. The pain is the same, if not worse, than a divorce of a younger couple. While custody battles won’t likely be of center importance at this stage, the emotional pain of a separation, reality of physically changing residence (who keeps the family home?), and splintering of finances all rise with marriage tenure.
- Less Time to Financially Recover – Depending on when the separation happens, it is likely you are both past your peak earnings potential at work (if you’re not already retired); new job prospects are less than when you were in your 20s and 30s. It is also likely one of you sacrificed a career in order to raise children; therefore, earnings histories might be lopsided. If you’re lucky, all of your financial accounts will be cut in half; however, this doesn’t solve the issue of replacing income.
- It’s Time to be Strategic – Splitting financial accounts down the middle is not necessarily the most financially efficient solution. Not all accounts are created equal in the eyes of the tax law and improperly divvying up your shared financial life could benefit one person disproportionately if you (or your lawyer) don’t approach the divorce through the eyes of a financial advisor.
- Knowledge & Empowerment are Key – No more excuses about not knowing how the bills are handled or what investments your family owns. Become an informed person who can survive with or without a partner.
This recommendation is about general financial preparation as much as it is about divorce. We recommend to all of our clients that both partners be engaged to ensure their financial life successfully continues in the event of tragedy, be it divorce, premature death, or incapacitation of one spouse.