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USA Today
21-06-2025
- Business
- USA Today
Dump your spouse, not your assets: 7 tips for surviving 'gray divorce'
For a midlife man or woman trapped in a failing marriage, a 'gray divorce' can bring liberation. And financial ruin. A man can expect his standard of living to decline by 21% after a gray divorce. A woman's standard of living will plunge by 45%. Both partners see their wealth decline by half. Despite those perils, the divorce rate has doubled since 1990 for Americans over 55. Women are more likely to initiate a gray divorce, researchers say. They also tend to fare worse financially after the split. Here are seven tips for managing your finances in a gray divorce, from AARP and other expert sources. Don't expect the same lifestyle after a gray divorce In a divorce, spouses typically split their assets. After the breakup, however, don't expect your monthly expenses to go down by half. Each partner will now likely face separate housing payments, utility bills and insurance premiums. 'It's really starting over with basic financial planning 101,' said Michelle Crumm, a certified financial planner in Ann Arbor, Michigan. The lifestyle adjustment can be especially brutal for women, who often stay in the family home, but with a vastly diminished income. 'And they can't afford the house, and they can't afford the three pets that they have,' said Niv Persaud, a certified financial planner in Atlanta. Don't get hung up on the family home In a common gray divorce scenario, one partner keeps the home and gives up a trove of other assets to stay there. That can be a mistake, experts say. Homes aren't the same as money in the bank. They're costly to maintain. The partner who gets the home can wind up house poor. 'A lot of times, people want to stay in the family home for sentimental reasons,' said George Mannes, executive editor at AARP The Magazine. 'But it can be a trap.' Remember: You're still going to retire Retirement savings loom large in gray divorces. 'Generally speaking, what most people have is retirement accounts and equity in their home,' said Monica Dwyer, a certified financial planner in West Chester, Ohio. Just like the family home, retirement accounts 'tend to elicit strong emotions, particularly from the spouse whose name is on the account,' Diane Harris writes in an AARP report on gray divorce. In divorce, a couple's collective retirement savings may be redistributed into equitable shares, one for each partner. But how that works depends on where you live. In any of nine 'community property' states, the court splits the assets down the middle, according to Investopedia. In more numerous 'equitable distribution' states, the court divides the assets equitably, but not necessarily down the middle. Financial planners strongly recommend that divorcing couples complete a qualified domestic relations order, or QDRO. It's a legal document that spells out how retirement savings are divided. The form 'can be great,' Dwyer said, as a tool for dividing other assets in divorce. A spouse who receives funds under a QDRO generally doesn't pay a tax penalty for withdrawing them. Don't assume all assets are equal When divorcing spouses are deciding how to divvy up assets, a financial adviser can play a crucial role in divining what different assets are actually worth. For example: $500,000 in a bank account is more valuable than the same amount in a 401(k). Why? Because the retirement savings have not yet been taxed as income, and withdrawing them early can trigger a penalty. By the same token, $500,000 in a Roth IRA is worth 'a ton more' than the same amount in a traditional IRA, Crumm said: The Roth funds have already been taxed. Diamonds are forever. Alimony is not. Alimony is generally awarded in divorce to a spouse who earned less, to help them keep up the lifestyle they enjoyed during marriage. Alimony can be awarded more or less permanently, or until a spouse dies or remarries. But that arrangement is becoming far less common, AARP reports. While details vary from state to state, alimony 'is now typically designed to last just long enough for a lower-earning spouse to figure out how to become self-supporting,' Harris writes. Crumm, the Michigan financial planner, counsels her clients to save 'a good chunk' of their alimony payments. 'Alimony probably doesn't last forever,' she said. 'The person who's receiving the alimony is at a disadvantage if they aren't planning well. When that ends, it's a cliff.' Don't fight over prized possessions Many divorcing couples wage protracted feuds over cherished possessions: Keeping a favorite painting for yourself, or punishing your ex-spouse by taking it away. For a divorcing spouse who really wants to antagonize a sports fan, 'you go after the football tickets,' Crumm said. She has seen couples spar over seats at Michigan Wolverines games. When spouses can't agree on who gets what, the judge decides, and that scenario often doesn't end well. 'You're punishing yourself when you go to court, really,' Dwyer said. A better solution, she said, is to divide marital assets through mediation or 'collaborative law,' striving for a settlement outside of court. Get on with your life You aren't just divorcing your spouse: You're also divorcing yourself from their finances. Take care to remove a former spouse from your financial accounts, experts say. Change beneficiary designations on investment accounts and insurance policies to ensure your ex doesn't inherit your stuff by mistake. A divorcing spouse may need to rebuild their credit, especially if most accounts were in the ex's name. 'Be extra careful about credit cards that you have shared,' said Mannes of AARP. 'Make sure your spouse doesn't keep the account open.' It's also a good idea to monitor your credit report, Dwyer said, to make sure a former partner's history doesn't muddy your own. 'Your ex does have your Social Security number,' she said. 'If we're talking about somebody who had a problem with gambling, if we're talking about somebody who has a spending problem, then you want to lock everything down, split everything up.'
Yahoo
30-05-2025
- Business
- Yahoo
You won't know when a recession starts: 5 key facts about downturns
The looming threat of recession has hung over American consumers for what seems like forever, an ongoing economic drama that stretches back to the early pandemic years. The chances of a recession in 2025 currently stand at about 40%, according to a May 27 report from J.P. Morgan. A month ago, many forecasters put the odds higher than 50%. If a recession comes, how will we know? When will it end? What will be the fallout on Wall Street? Here are some answers, drawn from experts at Investopedia, Motley Fool, Fidelity, NerdWallet and other sources. Economic downturns might seem to last forever: Endless months of corporate layoffs, shaky stock prices and general financial malaise. Yet, going back to the Civil War era, the average recession has lasted only about 17 months. Since World War II, the typical recession has lasted about 10 months. 'The reason they've been getting shorter is that policymakers and the Federal Reserve and the Treasury have been getting more creative about how to deal with them,' said Caleb Silver, editor in chief of Investopedia. 'That could mean flooring interest rates. That could mean stimulating the economy by giving stimulus payments to households.' Recessions feel interminable because of their impact on the job market, stock market and household budgets. The actual downturn might end in 10 months, but it 'may take us longer to bounce back,' said Niv Persaud, a certified financial planner in Atlanta. Recessions are part of America's boom and bust cycle. And here's the good news: Boom times tend to be longer. In the post-WWII era, the average economic expansion has lasted for nearly five years. The National Bureau of Economic Research defines a recession as 'a significant decline in economic activity spread across the economy, lasting more than a few months.' By that definition, a recession isn't a recession until the downturn has persisted for at least a few months. Theoretically, we could be in a recession right now. 'You don't usually find out that you're in a recession until six months after you've been in one,' said Denise Chisholm, director of quantitative market strategy at Fidelity. The economic bureau decides when a recession has started, Fidelity reports, measuring signs of sustained decline in purchasing power, employment data, industrial production, retail sales and gross domestic product, among other factors. Typically, those metrics must fall for several months before the economic bureau invokes the "R" word. But not always: The COVID-19 recession of 2020 lasted only two months. How convenient it would be for wary investors, searching for clues to the market's direction, if stock prices began marching steadily down on the day the economists announced a recession. But the market doesn't work that way. 'The stock market is a leading indicator,' said Robert Brokamp, a senior adviser at The Motley Fool. The market anticipates economic trends, including recessions, months before they arrive. 'It starts to go down, generally speaking, six months before a recession,' Brokamp said. 'And it starts to recover six months before the recession is over, very broadly speaking.' When you consider that we don't know a recession is happening until months after it starts, you begin to understand how hard it can be to make investment decisions in a recession. 'Stocks usually bottom out about halfway through,' said Chisholm of Fidelity. 'So, by the time you have learned you are in a recession, stocks, more often than not, have bottomed.' The stock market and economy don't move in lockstep. Sometimes they seem to move in opposite directions. 'If we go into a recession,' said Silver of Investopedia, 'you might notice that the stock market didn't dip that much at all.' However much investors might fret about the stock market in a downturn, history suggests the market will eventually recover. The S&P 500 took back all of its losses in the Great Recession of 2008, although not until 2013. If you're retired and spending down your savings, then a recession can bring fiscal disaster. For just about anyone else, there's time to rebound. The bigger danger, said Brokamp of Motley Fool, is losing your job. Unemployment hit 10% in the Great Recession, the jobless rate peaking after the actual recession was over. Unemployment reached 14.7% in the brief COVID-19 downturn. People lose jobs in recessions because companies are making fewer goods and selling fewer services, and thus, they need fewer employees. 'If you're still working, and you're not close to retirement, the big issue is job security,' Brokamp said. To buy low and sell high is a mantra of investing. But timing those transactions can be tricky. When to sell stocks is a particularly tough call, for the simple reason that stock prices tend to rise. You could sell your stocks on a day when the S&P 500 hits a record high, only to wake up the next day and watch the market climb higher. Cashing out of the stock market in a recession is generally a mistake, experts say, because of the market's notorious volatility. It's hard to predict when stock prices will slide, how low they will go, or when they will recover. 'Selling stocks to try to protect your portfolio from a recession is going to be an almost impossible enterprise,' said Sam Taube, a lead investing writer at NerdWallet. But buying stocks in a recession, experts say, can be a comparatively safe move. The 'buy low' directive instructs that investors should purchase stocks when the market is down. In a downturn, stock indexes can fall 10% or 20% (or more) below their historic highs. Buying stocks at those times is a relatively easy call. 'History has shown us that the stock market recovers,' said Brokamp of Motley Fool. 'So, if you have the opportunity to buy stocks at a discount, you'll always be happy you did it.' Remember, though, that months or years might pass before the stock market recovers completely from a recessionary swoon. Buying stocks in a downturn makes the most sense for investors who won't need the money for the holidays. This article originally appeared on USA TODAY: 5 facts about economic recessions: You won't know when one's coming
USA Today
29-05-2025
- Business
- USA Today
You won't know when a recession starts: 5 key facts about downturns
You won't know when a recession starts: 5 key facts about downturns Show Caption Hide Caption What we know: How savings could protect your family in a recession This is the strategy and amount of savings that protect your family in a recession. Here's what we know now. The looming threat of recession has hung over American consumers for what seems like forever, an ongoing economic drama that stretches back to the early pandemic years. The chances of a recession in 2025 currently stand at about 40%, according to a May 27 report from J.P. Morgan. A month ago, many forecasters put the odds higher than 50%. If a recession comes, how will we know? When will it end? What will be the fallout on Wall Street? Here are some answers, drawn from experts at Investopedia, Motley Fool, Fidelity, NerdWallet and other sources. Recessions are shorter than they seem Economic downturns might seem to last forever: Endless months of corporate layoffs, shaky stock prices and general financial malaise. Yet, going back to the Civil War era, the average recession has lasted only about 17 months. Since World War II, the typical recession has lasted about 10 months. 'The reason they've been getting shorter is that policymakers and the Federal Reserve and the Treasury have been getting more creative about how to deal with them,' said Caleb Silver, editor in chief of Investopedia. 'That could mean flooring interest rates. That could mean stimulating the economy by giving stimulus payments to households.' Recessions feel interminable because of their impact on the job market, stock market and household budgets. The actual downturn might end in 10 months, but it 'may take us longer to bounce back,' said Niv Persaud, a certified financial planner in Atlanta. Recessions are part of America's boom and bust cycle. And here's the good news: Boom times tend to be longer. In the post-WWII era, the average economic expansion has lasted for nearly five years. You won't know when a recession starts The National Bureau of Economic Research defines a recession as 'a significant decline in economic activity spread across the economy, lasting more than a few months.' By that definition, a recession isn't a recession until the downturn has persisted for at least a few months. Theoretically, we could be in a recession right now. 'You don't usually find out that you're in a recession until six months after you've been in one,' said Denise Chisholm, director of quantitative market strategy at Fidelity. The economic bureau decides when a recession has started, Fidelity reports, measuring signs of sustained decline in purchasing power, employment data, industrial production, retail sales and gross domestic product, among other factors. Typically, those metrics must fall for several months before the economic bureau invokes the "R" word. But not always: The COVID-19 recession of 2020 lasted only two months. In a recession, stocks don't always go down How convenient it would be for wary investors, searching for clues to the market's direction, if stock prices began marching steadily down on the day the economists announced a recession. But the market doesn't work that way. 'The stock market is a leading indicator,' said Robert Brokamp, a senior adviser at The Motley Fool. The market anticipates economic trends, including recessions, months before they arrive. 'It starts to go down, generally speaking, six months before a recession,' Brokamp said. 'And it starts to recover six months before the recession is over, very broadly speaking.' When you consider that we don't know a recession is happening until months after it starts, you begin to understand how hard it can be to make investment decisions in a recession. 'Stocks usually bottom out about halfway through,' said Chisholm of Fidelity. 'So, by the time you have learned you are in a recession, stocks, more often than not, have bottomed.' The stock market and economy don't move in lockstep. Sometimes they seem to move in opposite directions. 'If we go into a recession,' said Silver of Investopedia, 'you might notice that the stock market didn't dip that much at all.' The big danger in a recession is losing your job However much investors might fret about the stock market in a downturn, history suggests the market will eventually recover. The S&P 500 took back all of its losses in the Great Recession of 2008, although not until 2013. If you're retired and spending down your savings, then a recession can bring fiscal disaster. For just about anyone else, there's time to rebound. The bigger danger, said Brokamp of Motley Fool, is losing your job. Unemployment hit 10% in the Great Recession, the jobless rate peaking after the actual recession was over. Unemployment reached 14.7% in the brief COVID-19 downturn. People lose jobs in recessions because companies are making fewer goods and selling fewer services, and thus, they need fewer employees. 'If you're still working, and you're not close to retirement, the big issue is job security,' Brokamp said. A recession is a great time to buy stocks To buy low and sell high is a mantra of investing. But timing those transactions can be tricky. When to sell stocks is a particularly tough call, for the simple reason that stock prices tend to rise. You could sell your stocks on a day when the S&P 500 hits a record high, only to wake up the next day and watch the market climb higher. Cashing out of the stock market in a recession is generally a mistake, experts say, because of the market's notorious volatility. It's hard to predict when stock prices will slide, how low they will go, or when they will recover. 'Selling stocks to try to protect your portfolio from a recession is going to be an almost impossible enterprise,' said Sam Taube, a lead investing writer at NerdWallet. But buying stocks in a recession, experts say, can be a comparatively safe move. The 'buy low' directive instructs that investors should purchase stocks when the market is down. In a downturn, stock indexes can fall 10% or 20% (or more) below their historic highs. Buying stocks at those times is a relatively easy call. 'History has shown us that the stock market recovers,' said Brokamp of Motley Fool. 'So, if you have the opportunity to buy stocks at a discount, you'll always be happy you did it.' Remember, though, that months or years might pass before the stock market recovers completely from a recessionary swoon. Buying stocks in a downturn makes the most sense for investors who won't need the money for the holidays.
Yahoo
29-05-2025
- Business
- Yahoo
You won't know when a recession starts: 5 key facts about downturns
The looming threat of recession has hung over American consumers for what seems like forever, an ongoing economic drama that stretches back to the early pandemic years. The chances of a recession in 2025 currently stand at about 40%, according to a May 27 report from J.P. Morgan. A month ago, many forecasters put the odds higher than 50%. If a recession comes, how will we know? When will it end? What will be the fallout on Wall Street? Here are some answers, drawn from experts at Investopedia, Motley Fool, Fidelity, NerdWallet and other sources. Economic downturns might seem to last forever: Endless months of corporate layoffs, shaky stock prices and general financial malaise. Yet, going back to the Civil War era, the average recession has lasted only about 17 months. Since World War II, the typical recession has lasted about 10 months. 'The reason they've been getting shorter is that policymakers and the Federal Reserve and the Treasury have been getting more creative about how to deal with them,' said Caleb Silver, editor in chief of Investopedia. 'That could mean flooring interest rates. That could mean stimulating the economy by giving stimulus payments to households.' Recessions feel interminable because of their impact on the job market, stock market and household budgets. The actual downturn might end in 10 months, but it 'may take us longer to bounce back,' said Niv Persaud, a certified financial planner in Atlanta. Recessions are part of America's boom and bust cycle. And here's the good news: Boom times tend to be longer. In the post-WWII era, the average economic expansion has lasted for nearly five years. The National Bureau of Economic Research defines a recession as 'a significant decline in economic activity spread across the economy, lasting more than a few months.' By that definition, a recession isn't a recession until the downturn has persisted for at least a few months. Theoretically, we could be in a recession right now. 'You don't usually find out that you're in a recession until six months after you've been in one,' said Denise Chisholm, director of quantitative market strategy at Fidelity. The economic bureau decides when a recession has started, Fidelity reports, measuring signs of sustained decline in purchasing power, employment data, industrial production, retail sales and gross domestic product, among other factors. Typically, those metrics must fall for several months before the economic bureau invokes the "R" word. But not always: The COVID-19 recession of 2020 lasted only two months. How convenient it would be for wary investors, searching for clues to the market's direction, if stock prices began marching steadily down on the day the economists announced a recession. But the market doesn't work that way. 'The stock market is a leading indicator,' said Robert Brokamp, a senior adviser at The Motley Fool. The market anticipates economic trends, including recessions, months before they arrive. 'It starts to go down, generally speaking, six months before a recession,' Brokamp said. 'And it starts to recover six months before the recession is over, very broadly speaking.' When you consider that we don't know a recession is happening until months after it starts, you begin to understand how hard it can be to make investment decisions in a recession. 'Stocks usually bottom out about halfway through,' said Chisholm of Fidelity. 'So, by the time you have learned you are in a recession, stocks, more often than not, have bottomed.' The stock market and economy don't move in lockstep. Sometimes they seem to move in opposite directions. 'If we go into a recession,' said Silver of Investopedia, 'you might notice that the stock market didn't dip that much at all.' However much investors might fret about the stock market in a downturn, history suggests the market will eventually recover. The S&P 500 took back all of its losses in the Great Recession of 2008, although not until 2013. If you're retired and spending down your savings, then a recession can bring fiscal disaster. For just about anyone else, there's time to rebound. The bigger danger, said Brokamp of Motley Fool, is losing your job. Unemployment hit 10% in the Great Recession, the jobless rate peaking after the actual recession was over. Unemployment reached 14.7% in the brief COVID-19 downturn. People lose jobs in recessions because companies are making fewer goods and selling fewer services, and thus, they need fewer employees. 'If you're still working, and you're not close to retirement, the big issue is job security,' Brokamp said. To buy low and sell high is a mantra of investing. But timing those transactions can be tricky. When to sell stocks is a particularly tough call, for the simple reason that stock prices tend to rise. You could sell your stocks on a day when the S&P 500 hits a record high, only to wake up the next day and watch the market climb higher. Cashing out of the stock market in a recession is generally a mistake, experts say, because of the market's notorious volatility. It's hard to predict when stock prices will slide, how low they will go, or when they will recover. 'Selling stocks to try to protect your portfolio from a recession is going to be an almost impossible enterprise,' said Sam Taube, a lead investing writer at NerdWallet. But buying stocks in a recession, experts say, can be a comparatively safe move. The 'buy low' directive instructs that investors should purchase stocks when the market is down. In a downturn, stock indexes can fall 10% or 20% (or more) below their historic highs. Buying stocks at those times is a relatively easy call. 'History has shown us that the stock market recovers,' said Brokamp of Motley Fool. 'So, if you have the opportunity to buy stocks at a discount, you'll always be happy you did it.' Remember, though, that months or years might pass before the stock market recovers completely from a recessionary swoon. Buying stocks in a downturn makes the most sense for investors who won't need the money for the holidays. This article originally appeared on USA TODAY: 5 facts about economic recessions: You won't know when one's coming Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
