Attorney & Mediator
Attorney & Mediator

Divorce for Seniors – Why so much “gray” divorce?

While the national trend for divorce has declined, the incidence of older individuals getting divorced has increased.  There are a number of reasons for this.

First, divorce does not have the same stigma that it did years ago.  It is accepted by society, friends and family.

Next, life transitions are more evident as we get older.  No longer busy with jobs and children, the empty nesters begin considering what they are going to do with the rest of their lives.

Life expectancies and health has increased.  An individual who is 55 today can expect to live another 20 – 30 years.  Often, the parties believe this is too much time to spend with someone you have grown apart from.

The up-side for many older people is that divorce gives them the freedom to explore new avenues and interests.

There are several downsides that should be considered as well.  There may be loneliness in transitioning to a life without another individual at their side.  There may be the loss of friends and social networks due to the split.  Finances will be more difficult with 50% of the assets and 50% of the income.  And finally, there may be a loss of caregivers when the senior faces health challenges.

Divorce for Seniors – A gray divorce can impact women more substantially than men.

Portrait of a senior woman contemplating. Isolated on black background.

The statistics confirm that divorce is actually on the rise for people over the age of 50.  This can have a different financial impact upon the parties and particularly upon women.

First, younger couples who divorce have longer to regain their financial footing.  While they are splitting all assets and retirement plans in half, they have many years to work upon building their assets back up.   Divorce after the age of 60 leaves very little time to recover financially.

Women more often than men, have taken time off during their careers to be stay-at-home moms.  While this was a good emotional decision at the time, it means that their incomes lag behind that of their husbands.  It also means that their retirement savings are lower.

Since women statistically live longer, it means that they are retired longer.  In other words, their retirements cost more.  Yet, they have typically saved less for retirement than their husbands.  Post-divorce income for a woman may be lower than her ex-husband.  It may be more difficult to save the amounts that are necessary to have the retirement that she was looking forward to.

A gray divorce may require the woman to watch her spending more carefully and to live more frugally than her ex-spouse.  She must have a budget that realistically plans for living within her means and increasing her savings.

Women who divorce later in life may have to adjust expectations of what a retirement will look like.  While married, she may have looked forward to travel, rest and relaxation.  On a single income, much of this may be curtailed.

DIVORCE FOR SENIORS – What is different about “gray” divorce?

Portrait of a senior woman contemplating. Isolated on black background.

When younger couples divorce, it is likely that there can be child custody and support issues.  There often is less in the way of assets to divide.  Often, it is the division of debt.

For the grey divorce, it comes after years of working and accumulating, together.  There are special considerations.

Division of Assets.  While each of you will be entitled to fifty percent of the total of your marital estate, not all assets are created equal.  If you are not dividing each individual asset, but are instead dividing the value of the overall marital estate, it is important to keep tax considerations in mind.

A portfolio of stocks can have long term capital gain issues.  Were the stocks purchased at a substantially lower price?  The individual who takes this stock will take the purchase price basis.  When he or she sells, the capital gains will be due.

Retirement funds.  First, there are specialized orders that must be entered by the court in addition to the Final Order of Divorce.  These are called QDRO’s and EDRO’s.  This specialized order can divide an IRA, 401K, 403B, or SEP.  All monies in these plans are pre-tax dollars.  As they are withdrawn, income tax will have to be paid  Therefore, $50,000 in a savings account and $50,000 in an IRA do not have exactly the same value.  This must be considered when dividing the assets.

Social Security Issues.  It is not possible to have the Social Security Administration issue checks as part of a divorce.  It is, however, important to know the rules by which Social Security is paid.  For a long term marriage, it is possible after a divorce, that a spouse may actually have more income by taking 50% of his/her spouse’s monthly benefit as opposed to 100% of his/her own.

It is important to keep these unique issues in mind when going through a gray divorce.