Gray Divorce: Amicable Terms for Your Finances

How does divorce after a lengthy marriage impact your investment strategies and long-term planning? Having a plan in place throughout the process is key to keeping your finances on track when your marriage ends.

(Image credit: (C) 2019 Willie B. Thomas ((C) 2019 Willie B. Thomas (Photographer) - [None])

You and your spouse have made the decision to get a divorce after a lengthy marriage. Whatever your age, divorce can cause a great deal of emotional and financial upheaval. But a “gray divorce” may present a unique set of financial challenges compared with those of your younger counterparts. You have likely accumulated more assets — and, likely, more complicated assets — to divide and have less time to recover financially before retirement. In fact, you or your spouse may have even retired already.

As a couple, you have created goals together, but after this major life transition, individual goals will emerge and evolve. You need to be sure to take the time to try to rediscover what those priorities are for yourself. One spouse may want to “heal” by traveling the world for a few years, while the other wants to find renewed purpose by creating a foundation or making a bigger impact within the community.

Whatever your desires are, maintaining financial stability is crucial to living the life you want after the divorce. Arming yourself with a well-informed plan for each stage of the divorce may ease your transition to single life and help protect your financial future.

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Prepare Yourself in Advance

Planning how you might divide your assets can help the divorce process go more smoothly. Start by gathering an inventory of all separate and jointly owned assets, including bank accounts, investments, retirement plans and pensions, insurance policies and real estate. Make a list of all outstanding debts as well. This may include mortgages, home equity lines of credit, loans and credit card debt. As part of the information-gathering process, you will also want to have relevant documents accessible, such as prenuptial agreements, tax returns, wills, trusts and powers of attorney. Finally, obtain appraisals of tangible assets, such as antiques, cars, art and fine jewelry.

Compiling all of this information before the divorce will help you make smart settlement decisions. Don’t forget to keep your state’s laws in mind throughout this process as well. As you inventory your assets, confirm how each is titled. Separately owned property, such as an inheritance or family gift, usually won’t be part of a divorce settlement, so it’s essential to understand your state’s system for devising property at divorce.

In the case of a contentious divorce, there are extra precautions you can take to protect your interests. Be sure to search for assets your spouse may be hiding, and consider filing for legal separation as soon as you have your records in order. This filing will freeze assets so that your soon-to-be ex-spouse can’t move money out of accounts or change beneficiaries until a divorce settlement is reached.

Consider Future Needs

Once you’ve done your research and gathered an inventory of all assets, it’s time to assess your long-term goals and plans. Anticipating your post-divorce expenses may help you negotiate a settlement that meets your needs. Some questions to ask yourself include:

  • Will I need to alter my lifestyle after the divorce? Whether or not you anticipate immediate major lifestyle changes, you will want to make sure you have access to liquid savings in case you must suddenly rely on your own resources to meet personal needs. Build an emergency fund that will cover at least six to 12 months of living expenses.
  • How might this impact my retirement timeline and savings? Those in your age bracket tend to have amassed significant retirement investments across multiple accounts. Even if only one of you has retirement assets, these funds must be shared at divorce. You should understand and follow specific rules to divide retirement assets properly, which differ depending upon the type of savings you have. 401(k)s and pensions, traditional and Roth IRAs and annuities all follow different rules in terms of dividing assets in the case of a divorce.
  • Do I need to account for my children or grandchildren? If you are still supporting your older children, you may want to factor in the costs of any outstanding student loans or other debt you and your spouse are assisting them with. This would also be the time to consider any provisions to help support your grandchildren or finance their education.

Take the Next Steps

Once your divorce is final, you still have some tasks to complete to get your finances in order going forward. Update your paperwork, including retitling bank accounts, brokerage accounts and property in your name. You should also consider your insurance needs. If you’ve been receiving health insurance through your spouse’s employer, shift to your employer or consider buying COBRA or private coverage. Finally, be sure to update your will and estate plan. In reviewing these documents, change beneficiaries as needed, and name a guardian for your children, if necessary.

Divorce can have a long-lasting impact on your emotions, your lifestyle and your finances — particularly the complex finances of many older adults. Seek help from experienced divorce professionals, including financial advisers, attorneys and accountants to obtain specialized advice. Each divorce is unique, and what might be sound advice for one person may not suit another.

SEI Private Wealth Management is an umbrella name for various wealth advisory services offered through SEI Investments Management Corporation (“SIMC”). The information contained in this communication is not meant to substitute for a thorough estate planning and is not meant to be legal, tax, insurance and/or estate advice.


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Michael S. Farrell
Managing Director, SEI Private Wealth Management

Michael S. Farrell is Managing Director for SEI Private Wealth Management, a business unit of SEI that provides private wealth management solutions, serving high-net-worth individuals and families.