Gray divorces between those over the age of 50 who have stayed married for many years are more common now than they used to be. There are many benefits to divorcing when in an unhappy marriage, not the least of which is an overall improved quality of life.
However, those near or past the age of retirement may need to worry about the financial implications of filing for divorce. They may not be able to continue working to support themselves and may have finite resources set aside for retirement.
What assets do older adults often need to focus on when planning a gray divorce in Texas?
Retirement accounts
Obviously, what people have set aside for retirement can have a major impact on their standard of living during their golden years. Unfortunately, most married couples save with the expectation of combined resources and shared expenses. The need to divide retirement savings during a divorce can impact the standard of living that people can reasonably maintain after a marriage ends. Texas community property laws typically apply to any retirement savings accumulated during a marriage unless people specifically protect them with a prior written agreement.
Medicare benefits
Medicare is a government insurance program that provides basic coverage for older adults. Those at or past the age of retirement often count on Medicare to cover their healthcare costs during retirement. Medicare is available both to working professionals who pay taxes and their dependent spouses. A lower-earning or dependent spouse contemplating divorce later in life may worry about losing their eligibility for Medicare coverage. The rules for Medicare allow spouses who do not qualify on their own to retain benefits if they remained married to their spouse who qualifies for at least a decade.
Social Security retirement benefits
While Social Security retirement benefits usually aren’t enough to fund a retirement on their own, they can increase someone’s overall standard of living during retirement by supplementing their savings. Someone earns credits towards Social Security benefits as they work, so a part-time or stay-at-home spouse may not be eligible for Social Security retirement benefits on their own.
However, as with Medicare, dependent spouses can receive Social Security based on a spouse’s employment. If the marriage lasted at least 10 years, the dependent spouse can qualify based on the other spouse’s income. In fact, a lower-earning spouse can increase their Social Security payments by claiming partial benefits based on a spouse’s income. The claim of a dependent spouse will not affect the Social Security benefits that the other spouse receives.
Those who understand the rules that apply to retirement benefits and other key retirement resources may feel more comfortable moving forward with a gray divorce.
