Skip to main content

Financial Center for Women

Kathy's Story

Kathy and Steve were married for 40 years.  They raised 3 girls and have 6 grandchildren.   About 2 years after Steve retired, they found that wanted different things.  After a year of counseling, they decided to divorce.  Divorce after age 50 - aka "gray divorce" - is becoming more common. 

Divorce after retirement can have a significant effect on the nest egg.   Together your retirement was solid, apart not so much.  

Kathy and Steve would be splitting their income and assets.  Kathy’s income and assets were going to be cut in half, but her expenses were not.  Additionally, because she will be single her tax bracket will change, and she potentially would owe more in taxes.  We worked with Kathy to develop a budget.  Helped her to decide if made financial sense to keep or sell the family home.   She had lived in the home for 30 years and raised her family there.  It was not an easy decision, but she and Steve decided to sell.   We worked with her and her attorney to determine which assets would benefit her.   She was entitled to a portion of Steve’s pension, and half of all the martial assets.  Because his Social Security was higher than hers, she was requesting alimony.   Investment accounts can have different tax ramifications.  Retirement accounts like 401k’s/403b’s and traditional IRA’s are 100% taxable, where as, Roth IRA’s provide tax-free income.  Assets held in their brokerage account when sold would be taxed at the capital gains rate which is lower than her ordinary income tax bracket.    To manage her taxes, we recommended that she negotiate that her portion of the assets would come from the brokerage account and Roth IRA.   She tried but in the end the accounts were split 50/50. 

Working with us, her attorney and tax preparer, Kathy was prepared to move forward after her divorce.  She bought a small condo and made some lifestyle adjustments.   She is happy, enjoys spending time with her grandchildren and last time we talked she had started dating.