Gray divorces are more common now than they were a few years ago. Older couples who have stayed married for years are now at relatively high risk of divorce. Decreases in social stigma, increases in life expectancy and changes in what people expect from their spouses all contribute to the rise in gray divorce.
Some people are still anxious about gray divorce due to the practical implications. Those preparing for divorce later in life likely have several financial issues that generate anxiety, including the three common concerns below.
1. Splitting retirement resources
Retirement savings accounts may not yet be eligible for standard withdrawals if spouses have not yet reached retirement age. Pensions can also be very difficult to divide. Spouses usually need insight into what rights they have to pensions and savings funded during the marriage and guidance to avoid penalties or tax consequences.
2. Retaining key benefits
When one spouse focused more on their career than the other, the stay-at-home or lower-earning spouse may worry about the loss of benefits if they divorce. Dependent spouses can potentially qualify for both Medicaid and Social Security retirement benefits after a divorce. If the marriage lasted at least 10 years, they can claim benefits based on the prior marriage without impacting what the higher-earning spouse receives.
3. Covering cost-of-living expenses
Spouses often need their combined retirement savings to afford rent, groceries and other recurring expenses during their golden years. People preparing for gray divorce may need to adjust their financial practices, rework their retirement budgets and modify their expectations. They may need to continue working for longer or downsize their travel plans.
With the right guidance and perspective, financial stability is possible after a gray divorce. Working with an attorney can help spouses understand their rights and preserve their financial stability despite divorcing later in life.