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It used to be when you talked about marriage and the “golden years,” the picture was a traditional one. Get married, work hard, buy a house, have children and retire surrounded by family and some grandchildren.
Divorce was a hush-hush topic and a rare occurrence. However, as the world has changed, the definition of marriage, family, and divorce have all morphed.
Millennials and Gen Xers view the experience differently than earlier generations, and divorce is no longer as taboo.
While every divorcing couple has legal and logistical issues to weigh, for those facing a divorce later in life, commonly referred to as a “gray” divorce, there are even more questions, such as supporting older children, addressing retirement and reestablishing a plan for the future.
With divorce rates among those age 65 and above reaching record highs, here are some questions to ask yourself should you find yourself among their ranks.
What if I’m navigating college expenses?
Gray divorce is often associated with retirees or empty nesters, but with the shift in the definition of family, and the fact that couples are increasingly marrying later in life, many people are building families well into their 40s and 50s.
As a result, older divorcing couples today may have more complex family and financial responsibilities and, as a result, different concerns than their counterparts who married earlier in life.
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College education creates different challenges for later-in-life family builders. Unlike in gray divorces in years past, educational expenses might become a more pressing factor in your divorce settlement. To negotiate these terms, be sure you’re on the same page about what secondary education may include, timelines and expenses.
While lots of parents consider the distance from home, the program of study and how the school will help develop their child, divorcing parents must dive deeper. Is college limited to four years? Can they study abroad?
For parents who thought they would retire in their late 50s or early 60s, thoughts about funding education — especially if there are multiple children in the home when divorce occurs — drift to cost, making the target age for retirement later and later.
How can gray divorce affect my retirement?
Divorcing later in life can create financial aftershocks for couples. Unless clear prenuptial agreements were established to document asset distribution, you might wonder how to divvy up years of accumulated marital property and establish a new financial baseline.
You may find yourself navigating the complexities of dividing retirement accounts, pension plans and other benefits. Pair that with the shift in potential retirement age if you’re funding college education, and your eyes may cross with all you’re processing.
Will I have enough to retire if I stayed home or worked part-time? If you were a stay-at-home parent (or worked non-traditional jobs such as freelancing, consulting or multiple part-time positions), your nest egg might be a concern.
While you are likely to get a portion of your spouse’s retirement account, your own retirement account may be less robust than you planned. Even if you’re planning to resume working, if you’ve been out of the full-time workforce for a while, this may result in a lower starting salary than desired. This, combined with increased budget costs, might limit your ability to grow a retirement account.
Could the economy affect my divorce and retirement?
No matter your marital status, the economy can affect your retirement — but it’s especially a concern for divorcing couples. Inflation or other economic factors could affect your retirement accounts, the value of your savings, and the cost of living.
For gray divorces, this can be especially concerning. Many divorces center around the division of assets, and often retirement accounts and homes are a couple’s largest ones. In booming economies, this could allow for surplus funds; however, in unstable economies, this can lead to difficult negotiations. With rising inflation, mortgage rates skyrocketing, and roller-coaster retirement accounts, it can make those divorcing later in life stressed about how they might afford retirement.
What if I started taking early retirement benefits?
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While the government mandate for retirement is age 67, you can start taking early retirement withdrawals at 62. However, the court will not necessarily consider you retired at 62. For those industries where earlier retirement is common — police officers, firefighters, construction workers, etc. — you have an even wider gap to overcome.
If you or your spouse is enrolled in a pension plan, this can have significant impact when divorcing.
Some plans are governed by the Employee Retirement Income Security Act, known as ERISA, and can be protected, while others are not. Also, depending on the type of pension, if it’s in pay status, it can be considered income to you instead of an asset to divide, which can affect claims of alimony or child support.
Receipt of government benefits can be helpful, though. Most spouses don’t know that they are eligible to receive Social Security benefits in line with their spouse’s work history, not just their own.
What if my family situation is unusual?
Is there a significant age gap between you and your soon-to-be ex-spouse? Do you have a blended family? Do you have children still at home who are very different in age? Gray divorces of the past might not have faced these questions, but they’re not uncommon for today’s divorcing couples. If this applies to you, you’re likely not thinking about funding for college or retirement, but instead, about immediate needs and rebuilding a security net for your family.
If you’re the non-monied spouse, access to immediate cash flow is probably a priority. If you’re the monied spouse, you’re likely wondering how much you’re going to be sharing of your monthly income, and how quickly you’ll have to recoup to pay for it all.
As you think about the immediate next steps, don’t get lost in the “right now.” Staying focused on your goals for the future helps you make solid choices now. How close are you to retirement? Are you anticipating an inheritance from a family member? What assets can you obtain now to foster security down the road? What does the divorce process look like for me?
In any divorce, the time and expense of going to trial to resolve your divorce is a frequent concern. If you and your soon-to-be ex have an amicable relationship, mediation may be a good option.
Mediation allows parties to talk through issues and create an agreement that meets everyone’s needs. It also allows you more control over divorce-related expenses and timelines.
If you’re not amicable, involving professionals such as divorce lawyers, trust and estate professionals and financial experts can cut the cost down. They can help you see the specifics of your matter, do long-range planning and save you from any hidden expenses.
— By Jamie Berger and Sarah Jacobs, founders of New Jersey-based matrimonial and family law firm Jacobs Berger
