Nearly 25 percent of individuals entering divorce proceedings are over the age of 50. Since 1990, according to a recent report from the Pew Research Center, the divorce rate among this cohort has more than doubled.
This isn’t so surprising. People are living longer, healthier lives. One’s “golden years” can last for decades. Many who seek liberation and personal contentment find that divorce is a necessary step toward attaining it.
But there are a number of financial concerns unique to “gray divorce.” And, as a great number of individuals learn too late, failing to heed them can lead to extreme difficulty.
How The Already-Retired Plan For Retirement
Retirement is predicated on the idea that one has saved enough money during one’s career to live out the rest of one’s days comfortably (or receive enough Social Security income to do so). Divorce, or course, can meddle with these plans.
As detailed in the New York Times, gray divorce, “like widowhood…can contribute to economic strain and poor health, placing a larger burden on children and…on institutional support from government and other sources.”
Namely, unless a prenuptial agreement specifies otherwise, a couple’s assets will be divided when their marriage ends. This can greatly reduce one’s net worth. As a result, the happiness and freedom that divorce was supposed to bring will be quickly countered by anxiety about income.
Perhaps most pressing are questions concerning how retirement benefits will be split up. In this regard, at least, there is a system in place. Specifically, Qualified Domestic Relations Orders (QDROs) offer a means to ensure that retirement assets – pensions, 401(k)s, Roth IRAs and the like – are divided fairly. Simply put, a QDRO is a court-ordered decree that gives instructions to a pension plan regarding how to distribute the assets within it. It will determine what percentage of assets goes to a husband or wife, or toward child support payments, or other matrimonial considerations, including survivor benefit options to continue benefits after death of the retirement plan participant spouse. As such, QDROs serve as important means of protection, especially for older divorcees.
A Holistic Approach Is Needed
Many find that consulting with a lawyer can be helpful when entering the process. Even if one doesn’t end up retaining legal counsel, talking with an attorney can reveal some otherwise unknown factors. Indeed, experienced divorce attorneys will have seen numerous couples over their careers, and understand all of the issues and risks involved.
The drawbacks of divorce aren’t just financial. Research has shown that ending a marriage can initiate psychological and emotional distress. This can have a dramatic effect on one’s physical health. Such concerns are crucial to keep in mind throughout proceedings. An experienced divorce attorney can assist clients with these concerns throughout the process and provide the appropriate referrals to health-related professionals and programs.