Later Life Divorce And The Impact On Your Financial Plan

Investing & Retirement

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[Host] Although it can mark a new beginning, divorce is a stressful experience, especially when it occurs later in life. Fortunately, there are ways to prepare for the emotional and financial implications of this major life change.

Joe Sicchitano, Head of Wealth Planning and Advice Delivery for Truist Wealth, discusses common financial issues during a divorce, along with tips to help you regain your financial footing as quickly as possible.

[Joe Sicchitano] I think it's important for people to recognize that divorce, especially as it relates to retirement and planning in general, is a significant and kind of stressful change for many people. Going through a divorce, recovering from one, either way, few people are one, ready for it, or two, adequately plan for the financial or emotional implications of it.

In particular, a lot of the burdens that may come up out of a divorce can happen rather quickly and they can be severe. For people who are 50 and older, given the fact that they have less time to recover from a significant change such as a divorce, the implications, financially, can be very acute.

[Host] In a later-life divorce, it's important to consider the personal, financial, legal, and tax issues you're likely to face. Becoming aware of these issues can give you a sense of control and help you make better decisions.

[Sicchitano] I think there are four common categories when you're thinking about divorce and how it affects your financial planning. The first one is the personal side. There are many implications on the personal side, most of which start with the fact that it's an emotionally charged event.

So, these are things that can affect your decision making. There's family dynamics that get involved, all of which can influence how you react to this major life change that can be positive or negative.

The second thing is the financial indications. I think that's probably the one that people focus on the most. There are a lot of long-term financial implications with respect to divorce that can derail a very well-thought-out long-term plan. Those do need to be addressed, but I think not at the expense of understanding how it affects your short-term. How you recover your short-term financial stability with a divorce will influence how quickly you can recover the long-term implication.

On the legal side, there are a lot of implications that people may not give good attention to. These could be things related to how property is distributed. It could be, if there are minor children involved, how is their guardianship and the custody of those dependents determined? Those are usually, frankly, the most complex pieces and also, you know, similarly, very emotionally charged. How do wills, trusts, other legal documents that were designed with a joint language in mind, how are those rewritten?

And I think the last one—again, also one that probably people don't pay enough attention to—are the tax implications. Divorce affects tax brackets. So that may influence how support of a spouse is characterized, whether it's alimony or support. If that's not addressed properly, there could be some bad decision making handled with respect to taxes.

[Host] With these implications in mind, Sicchitano lays out some helpful financial steps when dealing with later-life divorce.

[Sicchitano] I think given just the four categories that we just reviewed, there are a lot of interactions with those four categories. So, perhaps first and foremost, the most important thing to do is realize that you need to surround yourself with a team of experts that can handle any and all of those things. So, advisors in your personal life, advisors on the financial, tax, and legal side, are very critical, almost serving as a personal board of directors through this major change.

Second, I think we do want to pause and work through the emotional aspects of it. There's a lot of uncertainty and fear that surrounds a curve ball such as this one for retirement and understanding how that affects your decision making, pausing to kind of understand where I may be letting that influence my decision making in an adverse way is critical.

Third, I think systematically stepping through your short- and long-term goals and re-evaluating them. How are they new or different, given this new change? How have my short-term plans needed to be adjusted? And then, what is the long-term implication on my plan? I may have had a very well-thought-out financial plan before the divorce. How does that need to shift and shape and change because of it?

And then, as always, if there's anything a divorce proves, it’s the fact that your plans can change and the importance of monitoring them and being able to adjust quickly given new circumstances. So, a well-thought-out plan is number one, no good if you don't implement it, and number two, can actually be a bad plan if you don't adjust to new circumstances.

[Host] For more information, contact your Truist Wealth advisor, or visit us online at

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