Within the past two decades, the divorce rate among couples over the age of 50 has significantly increased. Many of these divorces take place after decades of marriage, making the emotional and financial aspects of so-called gray divorces more life-altering and complex than divorces involving younger couples. Unlike their younger counterparts, many gray divorcees don’t have to contend with child custody matters involving minor-age children. Instead, for most, the focus shifts to financial matters surrounding how to fund retirement.
With typically more years and assets together, gray divorcees frequently face unique and complex emotional and financial challenges. Not only is an individual who may have been married for 30 or more years forced to figure out how to deal with matters previously handled by a spouse and live life alone, but he or she is also must also figure out how to afford retirement.
Individuals who are age 50 or older and plan to divorce, must closely examine and determine how much money they need to live out the remainder of their life. Suddenly, retirement assets that previously afforded one home and related household expenses, must be stretched to afford separate residences, vacations, health care costs and personal expenditures. It’s critical, therefore, that gray divorcees take financial matters in divorce very seriously.
Gray divorcees would be wise to hire a divorce attorney who has successfully helped clients in similar situations negotiate favorable divorce settlements. When nearing or in retirement, the ability to earn income and save money is limited. The focus, therefore, should be on retaining and obtaining assets that have limited tax liabilities. All assets, therefore, are definitely not created equal and it’s crucial to understand the true value of a 401(k) vs. a ROTH IRA or the real costs and potential tax drawbacks associated with keeping a shared home.
Source: Columbus CEO, “RETIREMENT PLANS THROWN INTO DISARRAY BY A DIVORCE,” Constance Gustke, June 27, 2014