Gray Divorce, Part II: Factors to Consider

People age 50+ are usually focused on finalizing their financial security for retirement and divorce can greatly disrupt that security. Divorce has significant financial implications for younger couples, but can have devastating financial consequences for older couples. Be sure to discuss the financial implications of a property settlement or alimony agreement with your family law attorney, to ensure your future financial wellbeing.  

• Retirement/Pension Accounts: Many couples divorcing later in life need to be sure that they can afford to live the rest of their lives on the retirement funds they saved during their marriage. It is crucial to evaluate the retirement, investment, brokerage, and pension plans that were acquired during the marriage and make sure that each spouse receives an equal distribution in the property settlement. If you are not yet retired after divorce and qualify under IRS regulations, you may want to consider utilizing the IRS’s “catch-up contributions” to exceed the IRS’s annual contribution limits for your 401(k) and IRA while you continue in the workforce to accumulate additional funds for your retirement.
• College or Graduate School Expenses for grown children: Have you always planned to provide financially for your children in college or graduate school? In a gray divorce, you and the other parent will have to decide if financially, you’re capable of continuing that plan and if one or both parents will contribute to the children’s educational costs.   
• Social Security Benefits: If you are divorced, an ex-spouse may be eligible to receive benefits on their former spouse’s benefits instead of their own benefits under certain circumstances.
• Life Insurance: Many people make financial plans that include whole life or term life insurance. If one spouse owes a financial obligation (like permanent alimony) to the other spouse upon divorce, you may want to negotiate remaining the other spouse’s life insurance beneficiary to cover financially if your ex-spouse were to die. As people age, it is wise to cover yourself just in case!
• Spousal Support: It is common in the baby boomer generation to have a more “traditional” marriage wherein the husband is the primary wage earner and the wife stayed home with the children. In a gray divorce, the lesser earning spouse will have less time and opportunity to increase their earnings and may need alimony to be financially solvent. If the paying spouse retires, however, long-term alimony can be modified or terminated, so it is important to weigh the property settlement with the need for long-term financial stability for the dependent spouse who would receive spousal support.
• Health Insurance: Older couples may have chronic health issues or require chronic prescription medications, which necessitates continued health insurance coverage. If one spouse relies upon the other for health insurance benefits, consider the costs and options for obtaining separate health insurance after divorce.

If you are considering a “gray divorce,” please reach out to our office to seek guidance on your unique situation.  

Schedule a Consultation