In recent decades, the phenomenon of “gray divorce” has surged. In 1990, just 8% of divorces involved individuals aged 50 or older, but today, that number has nearly quadrupled to nearly 40%, according to Bowling Green State University’s National Center for Family and Marriage Research. If you are navigating a gray divorce or any breakup later in life, it’s crucial to address how it could impact your financial future, especially your retirement plans.

Understanding the financial ramifications of a gray divorce is essential to avoid undermining your long-term financial stability. The good news is that with careful planning, you can take control of your finances and still retire comfortably. Here are some actionable steps to take:

If you’ve relied on your spouse to handle the finances, it’s time to get familiar with your own financial situation. The first step is to obtain a copy of your credit report from the three major credit-reporting bureaus — Equifax, Experian, and TransUnion. This will help you understand where you stand credit-wise and give you a clearer picture of any liabilities or debts you may need to address.

Additionally, review your joint tax returns and bank account statements. Even if you haven’t been actively involved in managing finances, it’s important to understand your financial situation. The IRS website is a helpful resource for tax-related inquiries.

While it may seem like a logical step to take control of your finances after a divorce, withdrawing funds from joint accounts prematurely could lead to legal trouble. Before making any changes to your joint accounts, it’s crucial to consult an attorney to ensure you’re following the correct process and avoiding mistakes. This is particularly important if your divorce is still in process.

Seeking legal advice can help you navigate these sensitive decisions.

Having credit in your own name is essential, especially if you’ve primarily used joint accounts or had your spouse as the primary account holder. Establishing your own credit can ensure that, if all joint accounts are closed or unavailable, you still have access to a financial line. Consider opening a new credit card or a small personal loan to help build your credit history.

Several tools can help you manage your finances, such as the Mint app for budgeting and tracking your spending, and Credit Karma to monitor your credit score.

The family home often represents a significant emotional and financial attachment, but it may not always be the best financial decision to keep it after a divorce. If there is equity in the home, you may face a situation where you have to sell it or borrow against it. Taking on the mortgage alone can create additional financial strain, and maintenance and property taxes can add to the burden.

Instead of making decisions based solely on emotions, carefully consider the long-term costs. In many cases, it might make more sense to sell the home and split the proceeds or negotiate for a share of your ex-spouse’s retirement assets.

For more insights on managing the financial impacts of divorce, the Washington Post article provides helpful advice on protecting your finances.

If you’re divorcing later in life, you may be concerned about your ability to rebuild retirement savings. While it’s true that you might lose a portion of your shared retirement funds, you can still take steps to ensure a secure future. If you’re eligible, consider contributing to an IRA or other retirement accounts, and explore strategies like catch-up contributions to maximize your savings.

For a deeper understanding of how to plan for retirement after a divorce, you might also want to check out the National Endowment for Financial Education (NEFE).

Divorce is complex, and the financial aftermath requires expertise. You may want to consult a financial planner or an estate planning expert who specializes in divorce. Many of these professionals offer services tailored to individuals going through divorce, helping you divide assets fairly and plan for your future. The Certified Divorce Financial Analyst (CDFA) program can help connect you with financial advisors who specialize in divorce settlements.

Gray divorce is a life-altering event, but it doesn’t have to define your financial future. By taking strategic steps and seeking expert advice, you can turn this challenge into an opportunity for growth. Financial independence is achievable, and the right resources are available to help you.

What steps have you taken to secure your financial future after a gray divorce? We’d love to hear your thoughts and experiences on our forum. Join the conversation here.