Financial Retirement Planning


Manage divorce and personal finances after age 65

http://gccihome.com/category/financial-independence/Divorce is difficult enough at any time in your life. The younger you are when you divorce, the longer you will have to recover financially from the settlement whatever it may be. But when you manage divorce and personal finances after age 65 or after you retire, it can be much more complicated and financially difficult. There is the usual splitting of assets based on age, dependency, support needs and access to the kids. With two people no longer sharing the expenses of running a household, it can become much more expensive for the individuals involved to handle all of the associated expenses. Significant adjustments for all parties are often needed, sometimes with painful financial realities.

A middle aged manager who reported to me who decided that he was going to separate from his wife and move into a place of his own, indicated to me less than six months later that he could not afford to live separately. It was just too expensive. He decided to move back in with his wife and children because it was just too expensive otherwise. Now imagine if you have just retired and are around  65 and have decided to retire. What are the impacts of retirement, divorce and suddenly realizing that you have to split all of your assets and income with your spouse?

Manage divorce and personal finances after age 65

Unless it is way beyond making it work, we suggest that people in this situation find ways to make work for them and recover their relationship. We will not even begin to address what this might mean on an emotional level. It is far too complex and varied to address. We will try to address some of the financial considerations instead. As a couple, you may be financially secure, sharing the expenses and supporting one home, car etc.  We are following this with a list of areas that need to be considered assuming it is a 50 – 50 split which it seldom will be in most situations. Readers can apply this list to their own situation and make adjustments as needed.

Your Home – assume you will either sell your home and split the proceeds or one spouse will buy out the other. Either way you end up with 50% of what you had and all of the expenses. Most people cannot replace their current home with 50% less.

Your Car – if you only have one car, you may have to buy another and split the value of the current vehicle 50 -50. Even if you own two cars, chances are one is worth more than the other.

Your investments – while your investments and pension income may be sufficient to support cohabitating couples, after they are both split 50 -50, will you have sufficient income to live in the manner you have become use to. Not likely and significant adjustments in life style will be needed.

Your debts –  are much the same. If the debts were jointly created then you have 50% ownership, however once divorced your credit rating may fall and suddenly consumers find themselves unable to find lenders to loan them money to finance their portion of the debt.

Insurance Coverage – do you still need life insurance coverage? Will the insurance costs double because now you need to support two homes etc. Look at all of your insurance coverage to ensure that not only is affordability considered, but you have adequate coverage for your needs.

Health coverage and benefits –  this can be a huge area especially for consumers in the US. Does one spouse lose coverage after the divorce and do they need to find additional coverage often at considerable expense?

Gifts to the kids – gifts to the kids that were previously shared are now individualized and may cost more as well when you consider that as a couple you are actually spending more money. Cut backs may be needed in order to survive.

Personal Items – that have significant value are some of the most difficult to deal with. Not only do they have significant sentimental value, it might be difficult for one spouse to buy the other out.

This is a relatively short summary, however the ramifications can be significant for spouse planning to separate and get a divorce after they retire and after the age of 55. Sometimes it is just much easier to Manage divorce and personal finances after age 65 than it is to actually divorce. Think carefully about what action you want to take before initiating action that cannot be stopped once it begins.

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