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Securing your finances during a grey divorce

If you have been following our blog, you've read about the recent rise of grey divorces, a phrase that refers those who divorce as they are close to retirement. In a review of divorce trends from 1990 to 2010 by Bowling Green State University's National Center for Family & Marriage Research, the organization found that the rate of younger Americans divorcing lowered during this period but doubled for those aged 50 and older.

Reasons for this phenomenon vary. In some cases, working wives are experiencing greater financial independence or either partner may be reevaluating goals for life in retirement. Whatever the motivation, complications arise when those seeking to sever the bonds of marriage try to separate assets that have been accumulated over a long period of time. Even when assets are divided fairly, it is often the case that neither party leaves the process in a better place financially. The National Center for Family & Marriage Research reports that the percentage of single, divorced people who are poor is higher in those over the age of 50 when compared with those who divorced at a younger age and those who have never divorced.

According to the president of the American Academy of Matrimonial Lawyers, "The vast majority of older couples who divorce, even if they've both worked or are still employed, see their standard of living decline substantially." More often than not, more women suffer more financial setbacks than men as a result of seeking divorce. In taking on the roles of primary caregiver to children or ailing parents, women's incomes suffer in the long-term because they may leave the workforce to attend to other responsibilities, which lowers the funds diverted to Social Security.

Interestingly, women are more likely than men to seek out divorce because they may be less accepting of a troubled relationship. In spite of financial setbacks, these individuals may feel divorce will provide them with more opportunities than maintaining the status quo.

For those concerned about the financial liabilities related with divorce, these are points to keep in mind when drawing up a divorce agreement:

1. Assess the true value of property.

You may think that retaining ownership of your family's home is important for your children's sake; however, keeping up with mortgage payments and house repairs may prevent you from investing in your retirement. In this situation, it may be better to sell the property that drains savings from reserves you will need in the future.

2. Be proactive in protecting accounts.

Divorce attorneys suggest freezing shared accounts during divorce proceedings to prevent an aggrieved spouse from draining funds from savings or retirement accounts. Consider placing a security freeze on your credit report. Doing so will prevent others from opening accounts in your name or obtaining a copy of your credit report to review your financial information without your permission.

3. Consider purchasing insurance to secure future alimony payments.

Even if your children are grown and you do not receive child support payments, you may be entitled to receive alimony payments. You can strengthen your financial security by investing in a life insurance policy that will disburse funds in the case of a former spouse's death.

For those engaging in divorce after having been married for many years, the process may be quite complex. Obtaining the advice of a knowledgeable attorney can help determine the best course of action to take.

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