Gray divorce, or a divorce that occurs between spouses who are over the age of 50 and who have been married for a significant period of time, is often different from divorce earlier in life. People may only have a few years left until retirement or they already have started retirement. They therefore have more reason to worry about the financial impact of ending a marriage.
Property division is an important consideration in any divorce, but there are resources that are often of the utmost importance for those approaching their golden years. The following resources are often the most important for people to properly address when they prepare for a gray divorce.
Real property
Many older adults face their estate planning process on the assumption that they can age in place in their homes. Typically, those who divorce do not continue living together. Discussions about who remains in the marital home and how the other spouse can receive a portion of the home’s equity likely need to occur.
Government retirement benefits
There are two main forms of government benefits that people often rely on to preserve their health and maintain a positive standard of living after retirement. People expect to receive benefits based on the contributions they have made to the Social Security program throughout their working lives.
They also expect to claim Medicare insurance coverage, which can help pay for their basic care costs. There’s often uncertainty about the rights of a lower-earning or dependent spouse who might not qualify for Medicare or full Social Security retirement benefits based on their own employment history.
For both programs, a 10-year marriage is typically all that is necessary for the dependent spouse to qualify for benefits based on the other’s contributions. Claims from dependent spouses typically do not affect the rights of higher-earnings spouses, which means that government benefits usually don’t need to factor into property division.
Retirement accounts and pensions
Many people save for their retirement for years by making regular contributions to special accounts. They may need to divide those accounts or at least account for their value during a divorce. One spouse might also have a pension that provides regular payments from their current or former employer during retirement. The name on the pension or savings account is less important than when someone contributed to the account. Deposits made during the marriage are usually subject to division during a divorce.
Especially if someone does not wish to return to the workforce, they may have to readjust some of their plans for retirement to account for the division of assets during the divorce process. Carefully handling the property division process can help individuals preserve their financial stability after a gray divorce.
