Divorce, at any age, can present financial issues and challenges. Older, unmarried Americans can be especially disadvantaged when their financial future becomes less secure. There are ways to prepare for this life transition. By understanding the issues that accompany “gray divorce,” overcoming financial and emotional turmoil, and utilizing tips to protect yourself and your assets, you are better able to move forward with confidence.
Gray divorce is a term used for people ages 50 and older going through separation and divorce. The term became mainstream after AARP sponsored a 2004 study to help raise awareness and understanding for people experiencing mid-life divorce. Pew Research reports that the divorce rate for those ages 50 and above has doubled since the 1990s. Contributing factors include a more relaxed attitude toward “until death do us part,” longer life expectancies, greater financial independence of partners because both are working, and higher divorce rates among those who remarried.
There are many financial and emotional differences from divorce at younger ages. To start, people over 50 may accumulate significant wealth after decades of marriage. This makes dividing assets more complicated from business interests, properties, retirement accounts, executive equity compensation to air miles. Additionally, titling of assets is important as parties distinguish between separate and community property and researching records and cost data.
Other important factors include healthcare and aging. Many have spousal medical coverage through employer-sponsored plans. Those over the age of 50 may also experience higher anxiety with concerns about it being too late to start over, recouping financial losses after splitting assets, the ability to retire or meeting one’s support obligations.
While family continues to be one of the largest concerns among older divorcees, custody or guardianship challenges experienced by younger couples are replaced with how to share life events such as weddings and grandchildren. Beneficiary planning and protecting children when one remarries are additional considerations.
Though the challenges associated with gray divorce are never something anyone wants to plan for, preparing yourself beforehand can help ensure the best possible outcomes. First, pre-divorce, gather information and build your support teams – one of friends and family for emotional support and one with professionals for legal, estate planning, tax and financial advice. Negotiate settlements, spousal and child support (if applicable), and alimony buyouts. It is important to be aware of what your post-divorce lifestyle will look like. Women, as an example, face unique challenges including earning less, starting after a divorce with less and living longer. Knowing where you stand financially – assets, income and expenses – and developing a comprehensive plan, will greatly assist in your recovery and strengthen outcomes.
One way to do this is to expand your education, skills and knowledge. You may be entitled to Social Security benefits on your ex-spouse’s record if you were married at least 10 years and you’re unmarried, age 62 or older, your ex is entitled to Social Security benefits and their benefit is greater than Social Security based on your work history.
While financial housekeeping is never something people enjoy, don’t forget that name or address changes may involve obtaining new Social Security cards, driver’s licenses, accounts, titling of assets, professional licenses, and more. Be sure to close joint credit accounts and look at creating a new will, trust, powers of attorney, to start.
For many, divorce is a fresh start and it can be a time of recovery - but it can introduce new stresses without proper planning. May you have sage advice and secure your future wisely.