Divorce always causes financial consequences for both spouses, and those effects typically have a far greater impact on people who have been married for decades. Along with the emotional implications that divorce causes, so-called “gray divorcees” face a unique set of economic challenges.
While the overall divorce rate has dropped in the U.S. over the past few decades, the Pew Research Center says that rate has roughly doubled since the 1990s for American adults age 50 and older. For those over 65, the rate has tripled during the same period.
Financial considerations for gray divorce
Disagreements over money can be one of the main reasons for ending a marriage as many couples develop different priorities for life, careers and financial goals. Still, there are several things to keep in mind once a marriage ends:
- The family home: This is typically one of the most valuable marital assets, and most spouses sell their house and split the proceeds. However, if one party wants to remain, consider the tax implications and long-term costs.
- Retirement funds: Pensions and other retirement accounts will likely take a hit in a gray divorce as what was once intended to cover one household is divided in two. Those accounts include IRAs, HSAs and 401(k)s.
- Spousal maintenance: In the case of younger people getting a divorce, alimony, or spousal maintenance as it’s called in Texas, is typically a short-term payment. However, a court often orders payments to continue for the rest of a recipient’s life if they are older.
- Social Security: If the nonworking or lower-earning spouse was married for at least 10 years, he or she might be able to receive some Social Security retirement or disability benefits as long as they remain unmarried and are at least 62 years old.
Seek knowledgeable advice over financial consequences
Getting a divorce later in life can be an extremely uneasy and complicated time, especially when one spouse has managed all financial matters. Consulting an experienced family law attorney here in Texas is crucial to understanding the financial ramifications and exercising as much control as possible when preparing for your new life.