The messy divorce of Arnold Schwarzenegger and Maria Shriver unfold, with its battles over divvying up financial assets and spousal support, raises an important question: What financial steps should boomers take to get their lives back on track?
More and more people over 50 are getting divorced these days, and facing the money hassles and struggles that go along with it. As I reported recently in my story, “Divorce Over 50: 3 Mistakes to Avoid,” the divorce rate for those over 50 has doubled in the past two decades, while the overall divorce rate has decreased slightly, according to the latest data from the National Center for Family & Marriage Research at Bowling Green State University. That means some 300,000 couples over 50 divorced in 2008, and if the rate stays consistent, that number will balloon to more than 400,000 busted marriages in 2030. And as any older divorced couple knows, it can be tough to financially rebound from a break-up, since by the time you’re in your 50s and beyond, you’ve likely built up significant assets like real estate or a retirement account that you’ll now have to split up, thus reducing your total nest egg.
With that in mind, Encore asked Carole Peck, a Certified Divorce Financial Analyst (CDFA) and the owner of Carole Peck Financial Center near Chicago, to give us some tips on what people over 50 should do following a divorce to get their financial house in order. First, she says, it’s important to hire a financial adviser to help you manage your settlement and make it last for the rest of your life. After that, here are a few other recommendations.
Check your credit report
During a contentious divorce, bills sometimes don’t get paid, Peck says, which can hurt your credit score. And sometimes the credit agencies make mistakes (especially if you’ve changed your last name or address). So, it’s important to go to annualcreditreport.com to check your credit score following a divorce. If there are any changes or late payments that aren’t your fault, be sure to contact the credit agencies and file a rebuttal, she says. “For those who may not have established credit in their own name, they’ll need to build it by applying for, using and paying off credit cards in full every month,” she adds.
Buy long-term-care insurance
Once you’re divorced, purchasing a long-term care insurance policy is often recommended, since you no longer have a spouse who can care for you. (Health care expenses can quickly eat into the nest egg you got from the divorce.) “In your 50s, when you’re still in good health, these are more affordable, so don’t wait,” says Peck.
Have a power of attorney document drawn up
Now that you’re no longer married, you need to appoint someone to make decisions for you should you, through illness or injury, become unable to make them. Peck recommends having your lawyer draw up a durable power of attorney, a legal document that outlines who will make decisions — including financial moves — for you if you’re sick or injured and can’t make them on your own. This will also help you avoid dinging your credit score should the bills pile up while you’re in the hospital.