What happens when you divorce in your twilight years? There seems to be a common theme in my divorce coaching practice these days. Many of my older female clients are afraid of becoming bag ladies. A realistic fear? For most it is irrational thinking, for a very few it’s a slim reality, but with proper planning and insight it can be avoided.
Recent statistics show that the divorce rate has increased significantly amongst couples who have been in long term marriages of 20, 30 years or longer, often who are 50 years or older. People seem to be scratching their heads and asking, if these couples were able to make their marriages work 20 years and longer, why couldn’t they last “till death do us part”. The truth is, no matter how old you are, or how long a couple is married, that doesn’t make them invulnerable to divorce.
What is surprising however, is that these older couples, often referred to as the grey divorcees, are entering their twilight years as empty nesters, while retirement is just on the horizon. For many couples, as their kids are out of the house and no longer a financial worry – a wish most parents relish — their lives may not be winding down, but their finances may be, and that’s the rub. The retirement plan that was dreamed of and planned for when the assets were shared as a couple, may no longer be possible. When the assets are split down the middle, often times the retirement plans will need to be altered.
I explored the retirement dilemma and drama many women have with Sue Van Der Hout a Director at One Vision Consulting, she also teaches Family Enterprise at Seymour Schulich School of Business. Ms. Van Der Hout provided the reality check, and while it can be hard hitting for some, it nonetheless gives you lots to ponder and prepare for to retire. You have to ask yourself “What does this mean in terms of my future hopes and dreams that I want to enjoy in my later life – will this change the way I planned on retiring?”
The bottom line is you have choices. And, while you might not like to have to choose between this and that, it does become the necessary question. For example, “If you are in a situation where you feel comfortably taken care of in your retirement, the decision to spend $1,500 may not be an anxiety provoking issue but, if that is your vacation for the year, or your daughters wedding dress, or your contribution to your RSP, a lot of women end up with debt and have to climb out, and then start saving for their retirement.”
Van Der Hout advises that you have to be realistic and “deal with the financial wreckage, and then move forward. If there is a wealth gap in terms of your ability to retire, what does that do in terms of you future decision making?”
Even when we feel strong and fit at 50 or 60 years, just the word retirement makes us feel old, but it is a certainty no matter how we feel. How the retirement happens is the uncertainty. That is why Van Der Hout further encourages people to come up with a plan because “if you have limited resources, and your resources are stretched to the limits and can’t bear another crisis – a roof leaking, a root canal or some physical injury that recovery isn’t covered by insurance – what do you do?” Planning is the key to a successful retirement, she says.
Here then are the important financial questions you need to ask yourself – or a professional – in order to retire with confidence.
- Develop your financial balance sheet. What am I truly living on now? What do I need to live on?
- Explore your financial outlook. What is the state of all my resources, both current and future? Is there an income gap prohibiting me from achieving my objectives – and if so, how am I going to fill that gap?
- Think about lifestyle. What will my life look like financially given my current lifestyle? What will my life look like as I change my lifestyle when I retire?
- Understand your needs vs. your wants. Ask yourself, what do I need to do to understand my finances on a go forward basis, and are my choices going to help or hinder my retirement plans?
- Build a retirement plan. Establish a series of goals for yourself perhaps with the assistance of a professional, colleagues or friends with expertise in the area.
- Develop your retirement strategy. Use your financial and human resources to support and educate you to learn which assets can give you the best returns.
- Where will you live? In order to properly answer that question, you need to know what are your needs and capacity. For example if you are moving from a 3 bedroom home to a studio apartment – where do you want to live, how will this impact work choices and so on.
Often times, finances are the reasons contributing to the ending of are marriage, the important financial conversations were never really explored; perhaps they were sidestepped. But, the reality now is if the only bags you want to carry are Coach, Mark Jacobs, Prada, or 9 West – you need to start the financial retirement conversation now with your support team, and the twilight you’re enjoying is not only retirement in later years, but the beautiful evening sunset.