Different types of divorces result in different consequences for those involved. For example, divorce that occurs shortly after couples get married might present challenges related to custody matters, as the children they share might still be very young. By contrast, a divorce that occurs after many years of marriage when spouses are at a more advanced age can be substantially different.
Gray divorces involving those who have remained married for many years are now among the most common divorces in the United States. One of the biggest deterrents to gray divorce is the potential financial impact that the end of a marriage might have on both spouses. The following are some of the most common financial implications of a gray divorce.
Spouses have to divide their assets
The most pressing financial concern in many gray divorce cases is how to divide major assets including real estate and retirement savings. The terms set during property division negotiations or litigation can have a direct impact on someone’s financial stability and standard of living later in life. People often need to employ great care when dividing property. They want to ensure that they properly identify and value marital resources and that they secure terms that are appropriate given their marital circumstances.
Dependent spouses may require support
If one person left their job or only worked part-time so that they could take care of the family home or children, those sacrifices may put them at a long-term economic disadvantage. A dependent spouse may require financial support because they do not have the potential to earn a competitive wage after years outside of the workforce.
Dependent spouses may also worry about certain state benefits, including Medicare coverage and Social Security retirement benefits. Lower-earning or non-working spouses can often qualify for benefits if a marriage lasts at least 10 years. People need to understand the rules for those benefit programs in order to protect themselves from scenarios in which they might experience Financial hardship.
People may need to adjust their retirement plans
The final major consideration for those seeking to properly account for the financial impact of a gray divorce is the need to reevaluate retirement financial plans. People need to prepare to live on a single stream of income. Some people find that by remaining in the workforce for an additional year or two, they can largely close the gap between what they planned for retirement and what they can achieve after the end of their marriage. Other times, people need to scale down travel plans or alter their living arrangements to reduce their overall cost-of-living expenses.
Those who are pragmatic about both divorce and retirement after divorce can potentially minimize the financial hardship they have to accept because they decide to end a marriage later in life. Having a realistic idea about the financial implications of a gray divorce may help people more effectively plan for the best future possible.