5 Smart Money Moves to Make When You’re Suddenly Single After 50

Finding yourself suddenly single can be challenging at any age, especially if you were partnered for a long time. That’s what inspired us to create Opal’s Divorce and Money Guide. But those who are nearing retirement age (or already there) often face unique challenges. For the first time, perhaps ever, many are left to manage their finances and make major financial decisions on their own.

“Grey divorces” are becoming more common. As of 2019, 36% of people getting divorced were 50 and older. But many people in this age group aren’t single by choice. The average age a woman becomes a widow is 59, according to the U.S. Census Bureau. About half go on to outlive their husbands by 15 to 30 years.

The truth is that people of all genders can wind up single later in life—and it can create a financial shock. Taking the helm of your finances may feel difficult or overwhelming, particularly for those with significant assets, joint accounts, and children to take care of. Here are five important things to consider with your financial advisor during this transition.

1. Take Stock of Your Accounts

Sorting through your finances may feel challenging if you’re grieving. While taking care of yourself, see if you can put out the biggest fires first. That includes taking stock of all your accounts.

  • Joint checking and savings accounts: If divorced, you can close out these accounts and open new ones on your own. Those who are widowed can transition joint accounts into their own name.
  • Retirement accounts: This includes 401(k)s, Traditional and Roth IRAs, and any other retirement accounts. List your own, along with any you may be inheriting from a deceased spouse or acquiring from an ex-spouse after a divorce.
  • Other investment accounts: This includes brokerage accounts and health savings accounts (HSAs) that you’ve either inherited or acquired through divorce.

2. Revisit Your Budget

It’s common to experience a change in cash flow after a divorce or the loss of a spouse. If they were working, you’ll no longer have their income to rely on. If they were retired, your household Social Security benefit could change as well. Here are some important action items to put on your list:

  • Review your income: That includes any money you relied on from your spouse, whether that was from earned income or Social Security benefits. (We’ll touch on Social Security shortly.) Now review your own income and clarify how much you have coming in after taxes each month.
  • Look at your expenses: Depending on your situation, you may need to make some lifestyle changes. That may be as simple as tweaking your discretionary spending or as significant as downsizing to a more affordable home. Every situation is different, but what matters most at this point is getting clear on your monthly expenses. Opal’s Monthly Budget Guide is a great resource.
  • Think about your financial goals: Your short- and long-term financial goals may have changed now that you’re on your own. For example, you might want to plan a vacation with friends, start a new business, or change your retirement vision. Take this time to clarify what you want.
  • Put it all together: Sit down with your financial advisor to fine-tune your new budget and develop a plan for this next chapter of your life. Taking this step can help reduce stress and put you on the path toward reaching your financial goals.

3. Make a Plan for Any Life Insurance Policies

If your spouse has passed away, you may be anticipating a life insurance payout. Be sure to consult your financial advisor before making any big money moves. While it may be tempting to, say, pay off your mortgage or buy a new home in cash, you don’t want to lose all your liquidity. It might be wiser to use some money to shore up your emergency fund or invest in a way that supports your financial goals and risk tolerance.

Those who’ve gone through a divorce will want to remove their ex-spouse from their insurance policies—and any other accounts that list them as the beneficiary. Opal’s Beneficiary Review Checklist can help, even if you’re moving forward as a widow.

4. Collect Benefits on Retirement Savings

If you lost your spouse and have inherited any retirement accounts, be sure to connect with an experienced financial advisor about how to manage them. While required minimum distributions (RMDs) are not required for a Roth IRA you open and own yourself, they are required for inherited Roth IRAs. Instead, you might choose to assume a deceased spouse’s Roth IRA, rather than inherit it. This allows you to transfer the balance and continue contributing to it. You can also take distributions per Roth IRA rules, and RMDs don’t apply. Having said that, it’s always wise to talk with a tax professional if any assets are going through the probate process, which can be long and costly.

It’s also possible to acquire a portion of an ex-spouse’s retirement accounts through a divorce agreement. A financial advisor can help you plan ahead. It may involve a one-time distribution of funds.

5. Revaluate Social Security

If you’re a surviving spouse, you may be eligible for Social Security survivor benefits that are equal to a portion of their benefit amount. This amount will depend on your age. If you’re already receiving your own Social Security benefits, you can only opt into survivor benefits if the amount will be greater than your current benefit. In other words, you cannot collect both.

If you’re divorced, you may be entitled to a portion of your ex-spouse’s Social Security benefits if:

  • You’re at least 62.
  • You’re unmarried.
  • You were married to your ex-spouse for 10 years or more.
  • You’ve been divorced for at least two years before applying for benefits on their record.

It’s important to note that the benefits you receive will have no impact on your ex-spouse or their current spouse if they’re remarried. Whether you’re widowed or divorced, changes to Social Security benefits should factor into your new monthly budget.

Becoming single in midlife has its challenges, but this transition can also be an opportunity to grow as a person, start a new chapter, and experience life in a new way. Opal Wealth Advisors is here to help you navigate your new financial reality after a divorce or death of a spouse. Contact us today to make your new financial game plan.

Sources: National Library of Medicine, Social Security Administration.

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