A gray divorce, or a divorce after age 50, can make your retirement lifestyle very cramped.
Your personal financial situation may not be the first thing that comes to mind when you say “I do.” But in reality, couples who get married and stay married have advantages that singles do not, such as splitting expenses, tax benefits, and having two (or more) sources of income.
Divorce rate among older Americans doubles, triples
Baby boomers have always been known for breaking stereotypes, one of which may be the traditional constraints of marriage.
According to data from US Census BureauDivorce rates for those over 50 have doubled since 1990. And it’s even worse news for those over the age of 65, whose divorce rate has tripled hers. In 2021, 34.9% of all Americans who divorced in the previous calendar year will be aged 55 or older. Two degrees Percentage of other age groups.
Worse, without the economic benefits of marriage, unmarried baby boomers are nearly five times more likely to live in poverty.
16 tips and considerations for a gray divorce
There are many things to consider when it comes to divorce after the age of 50, when retirement is approaching. Below are 16 considerations.
1. Be prepared for some financial hardship
“People who go through a gray divorce face considerable challenges. financially disadvantagedAnd they continue to grow as a demographic group,” says Susan Brown, a sociologist at Bowling Green State University.
Compared to married people, those who fall prey to “gray divorces” may have a more difficult time in terms of quitting their jobs and living comfortably in their golden years.
The couple will have an economic advantage. With multiple sources of income and the ability to split expenses, couples can meet their financial burdens more easily than singles. In addition, there are tax and social security benefits for married couples.
On the other hand, single people have to pay for their own mortgage, rent, living expenses, insurance, etc.
“Social Security was designed at a time when most older people were married, but this scenario is less common today and likely to become even less common in the future,” the study said. has been written. “Indeed, fewer marriages are associated with fewer women’s eligibility for social security spousal and widow benefits.”
Singles, especially those approaching retirement, may see their assets deplete faster. This trend is of particular concern during retirement, the time when adults need their resources the most.
Most difficult for women:
Economic disadvantages are the greatest burden for divorced or unmarried women. But a study by Bowling State University found that those who were widowed later in life were the most fortunate bachelors.
2. Embrace your new life
Divorce can be heartbreaking, but you are probably heading into one of the happiest times of your life.
research from Age Wave and Merrill Lynch It turns out that of all the times in our lives, we are happiest and most contented between the ages of 65 and 74.
and, Expert PhDs from Princeton University and the London School of Economics and Politics Science found that happiness peaks at what age. twenty three and 69.
Wow! Sixty-nine! It’s older than most of us. And even though she’s over 69, there’s still plenty to be happy about. Happiness usually doesn’t fall off a cliff.
Here are 65 tips for happiness, health and abundance in retirement.
3. Know what you need to split
It’s not uncommon for one of the couples to have more financial savvy than the other. For those of you who don’t know much, now is the time to get a complete picture of your financial situation.
You might want to start by getting full credit reports for both you and your spouse and reviewing tax returns. and, Noro has a guide on how to find hidden assets in a divorce discovery.
4. Expected 50/50 split
Most couples who divorce after age 50 were in long-term marriages. Therefore, there is a high possibility that the property will be split in half and the alimony will be paid.
And debt is not excluded from being split. In states with community property laws, you are responsible for paying half of your spouse’s debt, even if it’s not in your name.
5. Consider working with a financial planner during your divorce
Working with a financial planner to prepare for unexpected financial turmoil can also help protect your wealth and reduce your losses after a turmoil. There are also some considerations that you don’t want to manipulate yourself, such as:
QDRO: Retirement plans, such as 401(k)s and tax-exempt pensions, require a “Qualifying Family Relations Order” or QDRO to determine how they should be split in order to protect couples from significant tax consequences. Your retirement planner will advise you on the best time to get your QDRO. It usually comes sooner or later. For example, if one of the spouses dies before the order arrives, the other spouse may lose the money it was meant to have.
Questions about the house: For some couples, selling and dividing the profits may be the best course of action. However, if one of the couple wants to keep the house, it may provide financial security in old age. An advisor helps clear the murky waters surrounding that decision.
settlement: You probably want your financial advisor to review the settlement before it is finalized. A good advisor will help you refine the details and avoid pitfalls that will affect you for the rest of your life.
6. Understand what happens to your retirement account when you get divorced
Assuming you did not enter into a prenuptial agreement, your divorce will be subject to the rules of the state in which you live. In general, the rules aim for a fair distribution of assets. Some States (Community Property States: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin)Assets acquired during marriage are divided equally if the parties do not reach their own agreement.
A home and 401(k) are typically a couple’s most valuable assets, so they can be particularly contentious during a divorce.
according to 401(k) Help CenterThere are four common ways to handle your 401(k) and other retirement accounts in a divorce.
1. Comparable values: In this case, you keep your 401k and your spouse receives something of equal value.
2. Split the account. Dividing money in a 401k can be complicated by distribution rules and other regulations associated with the 401(k). Splitting money in an account requires a special court order, a Qualified Domestic Relations Order (QDRO).
3. Liquidate your account. You can also cash out your account, but due to distribution rules this is usually not the best option.
4.Rollover: If you rollover all or part of your account, you are no longer working for the company that initiated your 401(k).
7. Take care of yourself
Teaching an older dog new tricks can be difficult, but take it easy in the process.
Breaking up is hard, regardless of age. But after the age of 50, it can become even more difficult as habits and preferences become established.
Take care of yourself during this time, see your friends, and stay active.
8. Start planning your own retirement as soon as possible
Whether you’re working with a financial advisor or not, taking inventory of what you have as a newly single and projecting into the future can be incredibly empowering. Even if you’re stuck financially, knowing what you need can go a long way.
As you turn 50 and start thinking about divorce, it’s important to make your own retirement plan as a single person. Document what you have now and what you want to spend in the future to see where you stand. Then start fine-tuning your plans to build your own secure future. Retire later or move to a cheaper community.
NewRetirement Planner makes this process easy and guarantees that planning will make you feel better.
9. Think through your social security strategy
If you are divorced but have been married for 10 years or more, you may receive benefits based on your ex-spouse’s record (even if you are remarried) if:
- you are unmarried
- you are over 62
- Your ex-spouse is entitled to Social Security retirement or disability benefits
Assuming you have your ex-spouse’s social security number, Social Security Administration It helps you know which benefits will give you the biggest paycheck.
10. Consider tax implications
Taxes are involved in nearly every financial decision. for example:
- If I receive alimony, should I receive a monthly check or a lump sum? (And know that this income is tax-free.)
- If you pay alimony, it is not tax deductible.
- Selling your home can cost you a lot of money.
- Splitting an investment account represents a sale and may trigger tax implications.
- If you spread out multiple accounts, will your lifetime taxes be higher if you use a brokerage account or a retirement plan?
Again, a financial advisor can help you resolve tax issues in a gray divorce.
11. Be sure to update your inheritance plan and beneficiary designations
It’s not just your current and post-retirement financial situation that needs to be sorted out, it’s also necessary to make sure your estate planning and beneficiary designations are updated.
12. Remember to consider support for adult children
Child support for minor children is always part of divorce mediation. However, you can also document who is responsible for supporting your adult child.
Find out 5 reasons why your loved one could be a big risk to your retirement security.
13. Rethink your long-term care plan
Many couples plan to rely on each other for long-term care. It’s clear that it usually doesn’t work out after a divorce.
Consider your long-term care options carefully. Think about what you want care for and how you will pay for it. Here’s a guide to planning for long-term care.
14. Prepare for health insurance changes
Until you are eligible for Medicare at age 65, you may rely on your spouse for health insurance.
Carefully consider your insurance and copayment options after a divorce. You might find ideas here: Her 9 creative ways to fund medical bills before you qualify for Medicare.
15. Do you plan to remarry? Consider a prenup!
Consider writing a prenuptial agreement for your next marriage, as remarriages are more likely to result in divorce.
In it, many of these financial issues can be addressed. This is important because you are older, have more assets to consider than you had in your first marriage, and you may both have adult children to consider.
Seek professional advice from a lawyer, accountant, or financial advisor.
And keep your retirement plan up to date.
16. More tips for lonely retirement
Being alone can be scary to many people, but to others it can seem liberating.
Either way, here are 17 tips for becoming a solo senior.
