Overlooking something important or making a mistake now could be devastating
Financial Questions for People Getting Divorced In Their 50s
by Gary Foreman
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Susie hadn't planned on getting divorced in her 50s, but it happened. Now she needs to make sure that none of her financial matters fall through the cracks. Now is not the time to make major financial mistakes.
We wanted to help her learn about what financial matters need to be considered when getting divorced in the 50s. To answer these questions, we interviewed Bill Kearney, President of Integrated Financial Concepts in Mooresville, NC. Mr. Kearney is a Series 65 Fiduciary and wealth manger. His website is IFCAdvisors.com.
Q: What's the first thing that someone who gets divorced in their 50s needs to know about their retirement plan?
Mr. Kearney: That's a good question. I think it's critical that you understand the entire financial picture. Many households lean on one person (husband or wife) to do the majority of the financial management. So if you split and you're not that person, you're at a severe disadvantage. You need to know what you have as a couple, as well as what you're entitled to after the split. This includes what you want, what you need, and what you lawfully ought to get. You should know, for instance, that assets acquired during marriage are divided in accordance to laws that vary by state. Learn those laws and how they apply to you.
Seek out professional help if you come across something you don't understand. And, if you don't already know the role your spouse has played in handling your shared finances, find out. Then, educate yourself on those duties so that, post-divorce, you'll be able to pick up his or her slack when you're on your own. Taking the time to develop this level of fluency in your financial state of affairs is the best preparation for life after divorce. And it's a great way to begin to position yourself for good financial health once the divorce process is done.
Q: Married couples often rely on each other as caregivers. What should a single person do to cover that potential need?
Mr. Kearney: Find a trustworthy person or family you can depend on for support and care. Work out a payment strategy and put it in writing. Get legal advice prior to implementing a plan. An elder law attorney can steer you in the right direction. Perform a comprehensive due diligence on the strategy and the person(s) before signing anything.
Q: It's not uncommon for someone who's divorced to forget to remove their ex as successors or beneficiaries. Could you list some of the documents that should be checked for changes?
- Your Will
- Life Insurance, Annuities, IRAs, 401ks, Pensions, TOD (transfer on death) brokerage accounts, etc.
Beneficiary designations supersede whatever is specified in your Will. Therefore, even if you have rewritten your Will, your wife or husband can still inherit those assets if you neglect to change all of your beneficiary designations.
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Q: Is it easier or more difficult to plan for a married couple or a single divorced person?
Mr. Kearney: It's definitely more difficult to plan for single divorced people. Married people generally rely on each other in making financial decisions. Often times, single people have someone of a completely different age group (like a parent). And if divorced, their trusted resource is in full "protect" mode with their friend. Generally "single-divorced"is a red flag and not a client I would seek out.
Q: Are there any questions or problems in retirement planning that are unique to divorced persons?
Mr. Kearney: Divorced women generally have a hard time trusting people going forward. It can be very difficult to overcome this trust deficit.
Q: What's the most common retirement planning mistake that people who get divorced in their 50s make?
Mr. Kearney: Forgetting to change beneficiaries (leaving their ex-spouse on documents). By far, this is the most common mistake I see.
Reviewed August 2017
Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's the author of How to Conquer Debt No Matter How Much You Have and he's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com. Gary shares his philosophy of money here. Gary is available for audio, video or print interviews. For more info see his media page.
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