This recent article offers practical, specific information about important financial considerations in divorce. Don’t let the “late-life divorce” angle deter you. The factors addressed in the article affect more divorcing couples than just those over the age of 55.
- Tip 1: “Right-size” your expectations. In short, there are more costs with a divorce than before and rarely more resources. The piece quotes a wealth strategist named Chris Chen, who says it costs an average of 25% more for the couple to run two separate households. I’ve not seen this precise figure before, however it sounds like a reasonable point of reckoning. A realistic financial plan for post-divorce life will take such cost increases into account.
- Tip 2: Work longer, aka delay retirement. Increasing your life-time income will help offset the financial impact of a divorce.
- Tip 3: Be open to selling the family home. The advice here is not to keep the family home if it is a heavier financial burden than the party can afford. However, the likely “best option” of selling the family home may not be a simple choice from a financial perspective, given Seattle’s real estate and rental costs.
- Tip 4: Choose assets that will provide income, such as a pension.
- Tip 5: If there’s spousal support (alimony), guarantee that income stream with life insurance or disability insurance. Opting for insurance coverage helps ensure that the party receiving support will receive the resources to which they’re entitled, with a minimum of legal and administrative hassle.
- Tip 6: Be aware of all assets of the marriage. For most folks, divorce is the biggest financial transaction in their lives. It’s so important to fully understand the assets of the marriage and each party. In Washington, the law of separate and community property can color divorce outcomes; unless you’re a family law attorney, you likely haven’t analyzed your estate along those lines.
- Tip 7: Be mindful of how you will ensure that your health care needs are covered, and also determine what that will cost.
- Tip 8: Minimize the debt that you’ll divide in the divorce. If you need to carry debt forward, have each party “take” their separate portion of the debt and put it into a new account in that person’s name alone. This will reduce future headaches that can arise if a creditor tries to collect on a portion of community debt that should be the responsibility of the other spouse.