When a couple who has been married for several years decides to end their marriage, their reasons are usually complex. It may be that after decades together, they have grown apart or because of something as devastating as an affair. While divorce can be one of the most financially and emotionally devastating experiences a person may have, for those over 50 there are added considerations.
Financial Adjustment
Gray divorce, or divorce involving people over 50 who have been in long-term marriages, has been increasing over the last two decades. For an individual entering this entering this phase of life, starting over as a single person can be a financial shock. When the couple has been married for several years, it is likely that they have become used to sharing income and expenses. Transitioning to paying bills and expenses alone can be a hard adjustment.
Income and Support
Another change the couple will experiences is to their income and support. It may be that the partners are not equally equipped to support themselves. For instance, if one person has stayed home to raise the couple’s children they probably will not have the means or ability to pay for their expenses outside of their partner’s income. When there is a disparity in earning potential or retirement income the court is going to divide the couple’s assets, including retirement accounts and savings, in a manner which puts them in an equitable position. Most of the time this more or less ends up with each person getting half of everything. However, one partner may need to pay the other alimony or “spousal maintenance” to help them maintain their standard of living.
Retirement
During the divorce, the couple will need to consider their respective retirement funding sources and how the divorce will impact them. A couple planning for their retirement usually does not do while considering the possibility of divorce. However, their retirement funds will be subject to equitable division, which means the court could divide their retirement benefits. In most cases, each person will have to adapt to a retirement plan which is significantly less funded than the one they expected to share while married. This retirement income change may mean one of both will have to continue working.
One other issue – upon divorce, each partner should immediately take the time to update their estate plan and beneficiary designations. Failing to do so can result in some unintended consequences depending on the types of assets owned.
We understand the unique challenges which can be presented when couples divorce during their senior years and can help you plan for your new future. Please contact us online or by phone if we may be of assistance.