As couples plan for retirement, they often contemplate sharing their home and expenses as well as combining defined benefit packages, and social security benefits. When seniors who have been working towards these goals throughout their marriage decide to divorce, their retirement plans can dramatically and abruptly change. Here are some considerations regarding senior divorce:
Equitable Distribution
A couple that has been married for several years is likely to have numerous marital assets which may include a home, savings, and retirement accounts. Michigan is an “equitable distribution” state meaning that a couple’s property and debt is going to be divided in a manner in which the court deems fair. The marital assets, the length of the marriage and relative financial positions of the parties will all be taken into consideration during the equitable distribution process. Although some may believe that retirement accounts are the contributor’s sole property, these funds are eligible for division during divorce. This process also may apply to social security benefits as well. Additionally, the couple’s real property may either be awarded to one spouse or ordered to be sold so that the pair may split the proceeds.
Social Security
For many seniors, their Social Security benefit is an integral part of their retirement plan. When a couple who has been married for ten years or longer, a spouse may be eligible to get benefits on their former spouse’s record provided they are 62, not married, and they would receive a lesser payment under their own record. At full retirement age, many former spouses will be qualified to receive half of their former partner’s benefit. This can be complicated for those who had planned for retirement anticipating the full use of their social security benefit.
Spousal Maintenance (Alimony)
When a couple is ending their marriage, it may be that one is not as able to provide for their needs as the other. This could be due to a spouse staying home to raise children or to support their partner’s educational and professional advancement. The spouse may also have a disability which inhibits their ability to work. Further, when an individual is of advanced age, it may not be realistic to return to the workforce immediately or at all. In these circumstances, the parties may agree, or the court may order that one pay spousal maintenance to the other on a temporary or even permanent basis. For the obligated party, this could be an expense which substantially affects their lifestyle and retirement plans.
Delayed Retirement
Divorce can be expensive and financially devastating at any age. For seniors, this change of circumstance can mean having fewer retirement resources and more considerable expenses as a single person. For an individual planning on retirement, divorce may mean having to delay retirement or having to downsize severely.
We understand the unique challenges which can be presented when couples divorce during their senior years. Please contact us by phone or online if we can help.