If you thought people over a certain age were immune to divorce, think again. Divorce among older adults has become so common that it’s earned the name gray divorce.
Statistics show that divorce rates have doubled over the past 30 years among those ages 50 and over. For those ages 65 and older, the divorce rate has tripled. More than half of all gray divorces are between people who have been married for more than 20 years. All of this while divorce among those under 50 has seen a decline.
Why do people in these age groups decide to divorce? For some, it’s the fact that their children have grown up and moved out and that family bond is no longer holding them together. For others, it’s the idea of wanting to live their best lives and be happy. Many may have stayed married for the benefit of their kids. Whatever the case, there are certain things you should know if you’re considering a divorce after the age of 50.
Check your social security benefits
Before you divorce, check your social security benefits. You may be entitled to a higher benefit based on your ex-spouse’s earnings history. If you have been married ten years or more, you may eligible for a greater benefit if you meet the following criteria according to the Social Security Administration:
- You are unmarried.
- You are age 62 or older.
- Your ex is entitled to Social Security retirement or disability benefits.
- The benefit you are entitled to receive based on your work is less than the benefit you would receive based on your ex-spouse’s work.
By not checking your social security benefits, you may be depriving yourself of benefits you are entitled to.
Make sure you’re equipped financially to hold onto the family home
While you may like the idea of holding on to the family home, your bank account may not. Consider whether you can afford all the expenses on your own, like the mortgage, taxes, and any emergency repairs that may pop up.
Prepare and plan for higher expenses after divorce
You will be going from two incomes to one income, and your living expenses will likely increase. In addition, you may also have significantly less savings and retirement to rely on.
Higher expenses after divorce have forced some seniors to move to a more affordable state, while others take on part-time work to bridge the income gap. With the proper planning and by setting realistic goals, you can ease the financial burden.
Protect your assets with a QDRO
A QDRO is a qualified domestic relations order. This allows you to make a one-time withdrawal from your ex’s 401K or 403b without having to pay a 10% tax if you’re under the age of 59.5. Without a QDRO, if you fund your own IRA with part of your ex’s retirement account and try to access it before you turn 59.5, you’ll have to pay a 10% withdrawal penalty.
Discuss tax ramifications of decisions with your financial advisor, tax advisor, or accountant
Every financial decision you make regarding your divorce will come with a tax bill. You need to consider all of your options when making your decisions about everything from the mortgage payments to your alimony. If you’re getting money from your ex’s investment account, be prepared to pay taxes on it. Discuss what makes the most sense for you when it comes to your situation before you start dividing assets and making financial decisions.
Divorce at any age comes with its challenges, but when you’re dealing with a gray divorce, there are other things to consider. Taking your time and getting the right advice can make the process smoother and the consequences easier to handle.