Divorcing close to retirement age could put you at risk of financial hardship if you don’t know how to protect your assets and minimize your expenses. You should take a hard look at your finances before beginning the process. California is a community-property state, so your assets and debts are joint property.
Not understanding the value of your assets
It’s rare that both spouses understand the finances, and in many cases, one spouse is in charge. You should know the value of your assets, including your retirement accounts, and what the tax and fee repercussions are of splitting these assets during a divorce. How you split the assets makes a difference in how much money both of you keep. It could be wise to consult with a financial expert to ensure you divide the assets in the best way possible.
Not knowing your spouse’s debts
You need to know the total debt you and your spouse owe because you are generally both accountable for it. Even if you and your spouse agree that you’ll only pay your personal debt, if the other fails to make their promised payments, it will affect you. Keep this in mind when you plan your finances for living as a single.
Staying in the house
The house becomes too expensive to maintain for some people after a divorce because they no longer have the combined income. Living expenses are 40–50% higher for singles compared to couples. You should calculate how much money you need to spend on property taxes, the mortgage and house maintenance to know whether or not it’s wise to continue living in the house. If you’re in a high-asset divorce and you’re the one who earns less money, you may want to let your former spouse have the house or immediately sell it.
Making sure that you have enough money to live on during old age is important. Divorcing in your 50s can threaten that because your expenses might go up. Strategize how to best divide your assets and take the time to do the math on your projected living expenses to reduce the chance of financial hardship.