Over 50 and Considering Divorce? How to Prepare Financially, Pre- and Post-Separation

To preserve your wealth, you need to accept that changes are coming. You very likely won’t be able to maintain the same lifestyle separately that you did when you were together.

An older woman looks at a photo in her living room, surrounded by moving boxes.
(Image credit: Getty Images)

Divorce is becoming more common among people 50 and older – so common, in fact, that it has its own name: “gray divorce.” There are often major changes to someone’s finances and lifestyle after the divorce, but the sooner you face your new financial reality, the better off you’ll be.

I once had a client who insisted her No. 1 goal after her divorce was never to be forced to sell her house and downsize. At the same time, she wouldn’t listen to my advice to trim back her spending – such as vacations – in order to afford her house. She kept up her pre-divorce lifestyle, and soon worked her way into a financial mess.

Unlike younger people who have the time to start over and rebuild their financial lives, those 50 and older have less runway to accumulate wealth. For this age group, setting priorities and making key decisions will help protect and preserve their post-divorce wealth.

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Prepare a List of Assets and Debts

For those who have decided to pursue a divorce, one of the most important early steps is to provide detailed financial information to your attorney. A family law attorney will want you to come prepared with a complete list of your assets and debts, as well as income and expenses. Remember, attorneys charge hundreds of dollars in hourly fees, so the more information you can provide them upfront, the less money you will spend gathering this information together. If you don’t have a balance sheet documented, start now, and update it every year.

Compile the following information:

  • Assets, such as cash in the bank to retirement accounts, stock options and pensions, life insurance, primary and vacation home property values.
  • Debts, including amounts owed on the mortgage, home equity, credit cards and car loans.
  • Income items, which can be gathered from the most recent tax return or one about to be filed. Salary and bonuses, deferred compensation income, pensions, interest and dividends from investment accounts, rental income from vacation homes, and profits from a business are all income items that should be documented.
  • Most expenses can be gleaned from bank and credit card statements, or online bill pay records. Make sure you know how to access online bank accounts, and download the past 12 months of bank statements.

Plan to divide expenses into two categories: fixed vs. variable expenses. For example, if the mortgage payment is $2,500 and the car payment is $750, these fixed expenses should be factored into the settlement agreement.

Post-Divorce: Financial Do’s and Don’ts

After the divorce, there is a good chance each person will have fewer assets and possibly less income than when married. This usually means financial adjustments need to be made to lifestyle spending habits.

It’s not as simple as taking the income generated by both people and dividing it by two. Life will be different. There are now two households instead of one, both with fixed expenses; an extra vehicle may be needed, as well as more insurance costs.

It’s important to understand the type of expenses your new lifestyle can support. Here are some recommendations to help to adjust to a new financial situation:

Make a Fresh Budget

Make certain you can comfortably pay the necessary expenses – food, clothing, insurance, car, house – and leave a cushion for unexpected items. Temporarily put on hold the idea of buying extra items – a brand new car or upgraded furniture. Don’t forget to factor savings into your budget. For clients who receive alimony as part of the settlement agreement, we break it down between alimony used for living expenses, taxes and saving for the future.

Create a Financial Plan and Stick to It

Determine what your new goals are – are they to stay in your home, travel more, be able to retire sooner? Map out your cashflows and see how much needs to be set aside for current living expenses vs. future goals. Adjusting to a new financial reality means you may not have enough money to do everything you want, which is why prioritizing and making comprises are important activities. Stay the course – don’t change your mind or your financial strategy every few months. Revisit your financial plan every six months until you are very comfortable with how things are going for you financially.

Look Closely at Your Housing Budget

With less income, there will likely be less money for a house payment, furniture and upgrades. If you were living in a $750,000 house while married, you may need to dial back to a home worth $500,000 or less to afford payments and expenses. Housing is one of the largest fixed expenses in any budget, and you can’t buy groceries with the equity in your home. Downsizing may give you the freedom to achieve other financial goals with fewer budget constraints.

Re-imagine Vacations

While everyone needs to get away from it all once in a while, don’t let this variable expense become a financial burden. Your family vacations may not be as glamorous on your new single income. And it shouldn’t be a competition with your ex. It’s better for your kids to see the reality of your situation and see how you are approaching it head on, and adapting, than turning your head away from reality.

Divorce is a major event that will change your life emotionally, psychologically and financially. Whether you end up separating or staying together, take time to better understand your financial situation now, so you can move forward with a financial mindset that will serve you in the future.


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.

Lisa Brown, CFP®, CIMA®
Partner and Wealth Advisor, CI Brightworth

Lisa Brown, CFP®, CIMA®, is author of "Girl Talk, Money Talk, The Smart Girl's Guide to Money After College” and “Girl Talk, Money Talk II,  Financially Fit and Fabulous in Your 40s and 50s". She is the Practice Area Leader for corporate professionals and executives at wealth management firm CI Brightworth in Atlanta. Advising busy corporate executives on their finances for nearly 20 years has been her passion inside the office. Outside the office she's an avid runner, cyclist and supporter of charitable causes focused on homeless children and their families.