According to an article published recently on Washington Post, divorces involving older partners have soared over the last couple of decades. Currently, about a quarter of all divorces involve a partner who is 50 years or older, resulting in what sociologists refer to as gray divorce phenomenon. Gray divorce is associated with both demographic changes and challenging questions about finances and retirement for many older people. This is because divorce in later life is associated with many financial complications that most young divorcing people overlook.
While every Colorado divorce comes with financial issues, here is why gray divorce is associated with more financial issues.
The stakes a high
A big challenge faced by spouses going through a gray divorce is the fact that they don’t have enough time after a divorce to rebuild their finances. In fact, such spouse may have a few years left before they retire. For instance, if you are divorcing in your late 50s, you may have very few years to regain financial stability before retirement. Consequently, an expensive divorce might result in diminished funds for retirement or force you to work for extra years.
Remember, your retirement is fast-approaching and overspending on issues like divorce might cripple you financially. Thus, the financial stakes in a gray divorce are higher than they are for a young couple that chooses to divorce. With very few exceptions, a divorce order is permanent and what a court ultimately decides when it comes to the division of marital property can’t be changed after a divorce. Thus, if you fail to ensure your right to a fair division of marital property might end up compromising your desires for a better retirement.
Pensions and other benefits
Despite the ever-increasing rate of gray divorce, Social Security benefits and pensions remain significant assets that are overlooked in many divorces. Note that retirement funds can be divided between the partners even if it’s one spouse’s name indicated on the actual retirement account.
Unfortunately, many people wrongly assume that a court will always ensure that their right to their retirement funds is protected. Instead, QDRO (Qualified Domestic Relations Order) will be required to ensure that the retirement funds are shared between the partners after divorce.
Also, Social Security benefits can be shared between ex-spouses as long as the marriage lasted for ten years or more and the beneficiary is 62 years or older and unmarried. Researchers say that nearly all gray divorces involve spouses in first marriages that have lasted for about ten years or more. Thus, the division of Social Security benefits is a significant financial consideration that’s likely to take a central place in all gray divorce cases in the future.
The bottom line is…
Given the serious concerns associated with gray divorce cases, it is essential for the spouses to seek legal advice before filing a divorce. An experienced family law lawyer can help an older divorcing partners understand the complicated issues associated with gray divorce and what they can do to ensure their financial stability is unscathed.