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Divorces in a couples’ later years can be financially devastating, especially for women where the husband has earned most of the money and made most of the financial decisions. Let’s look at some of the most valuable ways advisors can help.
Al and Tipper Gore put so-called “gray divorce” in the headlines with the 2010 announcement of the ending of their 40-year marriage. But divorces later in life – sometimes referred to as “silver splits” – are on the rise, doubling since the 1990s. The split between Jeff and MacKenzie Bezos was a recent high-profile break up highlighting the increasing rate of divorce among those who have been married for 20 years or longer, even though the overall divorce rate in America is decreasing.
Many times, I’ve sat across the table from women who, in addition to grieving the ending of a marriage that has defined their lives for several decades, are scared and helpless. One of the first things I do is reassure them that they are not facing this challenge alone and that they have resources, both financial and legal. Once I get these women to understand that they do have choices under their control and resources available to support this new phase of life, they tend to calm down and make better decisions.
Here are two of the first steps advisors should take when advising women going through a divorce, especially later in life.
Help them understand how their assets are allocated
Because incomes of women older than age 50 tend to decline sharply following divorce, some of the first things we have to look at include the spouse’s deferred-compensation packages, stock options, ownership stakes, bonuses, pension plans, and other assets. In alimony states (those that grant permanent alimony), all these should be taken into account when compensation levels are calculated – not just the base salary.
