How gray divorce affects finances
Gray divorces, or marriages that end in senior years, are on the rise. The number of people getting divorced after 50 has doubled in the past 25 years. While divorce at any age triggers complex financial decisions, gray divorce has its unique set of considerations.
Children Are Less of a Financial Concern
On one hand, divorce can be much more straightforward at an older age. Children are grown, so there are no child support or custody battles, making the money component of divorce simple.
That is not to say that child support is the most complex financial concern. If a couple has maintained a single income household — such as with the husband working while the wife cared for the children — maintenance or alimony questions will be crucial. Luckily, when marriages last for a couple of decades, they tend to part less messily.
Older Divorcees Can Be More Civil
After several years together, there often will be more respect and less bitterness during a divorce. This can help by making the financial settlement more amicable.
Of all the potential financial issues, nothing hits a gray divorce harder than retirement. In the case of single income from one working spouse, the other spouse is left without a source of retirement income. Because of this potential pitfall, retirement must be the first consideration in a divorce.
Retirement Income Planning Is Crucial
There are ways to provide pension or 401k distributions to a former spouse. This is done through a qualified domestic relations order or QDRO. QDROs need to be approved and issued by a judge. Without these orders, retirement plans cannot pay benefits to former spouses.
There are lots of reasons for divorces at any marriage duration. If a marriage ends in senior years, make sure to leverage years of togetherness to forge a fair retirement for both parties.