You may be happily married at the moment. You and your spouse may have good jobs and be well-off financially. However, nothing lasts forever. Things can change in an instant. What would happen if your spouse died? What if you got a divorce? What would your money situation look like?
This is something you need to consider. Life has a way of dealing out the unexpected hands, so it is a good idea to have a sound financial plan in place. Would you be able to pay for your expenses if your spouse died or filed for divorce? It seems as though many married people are not prepared for something of this magnitude.
In a survey of 2,000 adults, aged 40 to 79, with at least $25,000 in investable assets, 87% were confident they could manage their finances alone. However, 41% had no plan in place to address either of those events. Surprisingly, women were more prepared than men. 36% of women had no plan in place, while 45% of men did not.
Preparing for Divorce
The best way to prepare for the possibility of divorce is to plan for it before you even get married. A prenuptial agreement is a document that both parties agree to and sign before walking down the aisle. This legal document outlines how assets will be split in the event of a divorce. It will say who gets which assets, and whether alimony and other factors apply.
If you are already married, not all is lost. You can opt for a postnuptial agreement. This document is similar to a prenuptial agreement, but it is executed once the parties are married. Postnuptial agreements are scrutinized more closely, since a spouse is entitled to much more after marriage.
Preparing for divorce is much more important as a couple reaches retirement age. Gray divorces—divorces that occur when a person is over the age of 50—are becoming more and more common. A divorce so close to retirement can wreak havoc on one’s future. Of those surveyed, 40% of those who had divorced had saved less than $50,000 for retirement. Also, 40% said that divorce ruined their retirement plans. In addition, 35% wished they had a prenuptial agreement in place, while 33% delayed their divorce due to a lack of financial stability.
Those who divorce later in life often end up having to work longer to make up the money they lost. For those who are already retired at the time of divorce, they may have to return to work or adjust their lifestyle so they do not spend as much money.
Preparing for Death
If you and your spouse do not divorce and stay together until death do you part, then more than likely, one of you will die before the other. While you might assume that your husband or wife will live until at least their 70s or 80s, the unexpected could happen at any time—in one’s 20s, 30s, 40s, 50s or 60s. It is especially devastating when a spouse is younger and in the prime of their working years. Once you lose that income, it can be hard to pay for the mortgage or even everyday expenses.
Replacing that spouse’s income can be challenging. That is why purchasing life insurance is a good idea. Life insurance is an extra expense, but you never know when it may come in handy. A policy for several hundred thousand dollars can pay off a mortgage, credit cards and other debt in the event of a spouse’s death. This can be a godsend if you have children. You will have peace of mind knowing that they will be cared for.
Knowledge is key when it comes to finances. There are many things you can do to boost your income and savings. Get a second job. Learn about the best savings accounts. Buy stocks and bonds. Pay down your credit card debt.
Learn how to budget and live within your means. This is very important. Your standard of living will likely decline when you divorce. There will likely be less money available, since two households are more costly than one. Figure out where all your money is going. What monthly bills and expenses do you have? How much are you spending on groceries? What about entertainment and non-essential purchases? Where can you cut back? Can you increase your income in any way?
If you are divorcing, your lawyer can help you make the right financial decisions. Your lawyer has enough experience to let you know if settling is in your best interest or if you should fight for your rights and possibly get more assets in a divorce.
After a divorce, a financial planner can help you prepare for life as a single person. You can get an idea of what changes you need to make so you have enough money to live on your own.
Seek Legal Help
How would you fare financially if you lost your spouse due to death or divorce? Do you have a plan in place? If not, it is not too late to take action. What steps can you take?
Many people delay divorce because of financial issues. Do not let a lack of money force you to stay in a miserable marriage. Palm Beach divorce attorney Scott J. Stadler can help you prepare for life after divorce. Get the financial advice you need. Call (954) 346-6464 and schedule a consultation with our office today.