Knowing the ins and outs of your finances is always a good thing. But for divorcing couples, especially those nearing retirement age, financial literacy is paramount.
I had the opportunity to speak with the AICPA’s Journal of Accountancy and discuss financial literacy for golden-years divorces. You can read the full article here, but I’ve also included a few key takeaways below.
Awareness is the Key to Financial Literacy
it is imperative for couples to establish open and regular communication about their financial life together, to share their plans for retirement, and to agree on their approach to saving and spending.
In a perfect world, both spouses are in the loop on all financial matters during the marriage — and into the divorce. But that’s rarely the case, so if you don’t know the details of your finances, start this conversation early (most preferably before you talk with your divorce attorney.)
In the article, I suggest you meet with a CPA before talking with your attorney, that way you can determine what you know — and what you need to find out. Nobody wants to get caught with a financial surprise during divorce.
Dividing Assets Can Be Tricky Business
The unfortunate truth is that the process of dividing assets is a lot more complicated than saving and investing. A divorce often means calculating spousal
support or child support, making sense of pensions and investments, and deciding what to do with the house. Until you understand exactly what you have,
you can’t make an accurate financial plan for the future.
In working with a divorce CPA (such as yours truly,) you’ll have peace of mind that a full picture of your financial portfolio is in view. I work with clients to understand all of the pieces in play, which means we are able to come up with the best post-divorce solution for you.
Divorce is More than Just a Legal Conversation
There are three components to a divorce—legal, financial, and emotional. The legal aspects of a divorce are complicated, and the emotional upheaval is huge. The financial aspect is challenging because at least one partner may not have a good understanding of the family finances, including retirement savings.
You and your spouse must be on equal footing in terms of financial literacy. Yes, your divorce CPA can keep the numbers and map out financial needs — but a good professional will do their due diligence to educate and inform you throughout the process. This means, even after the divorce, you’ll have a better idea how your finances work for you.