Divorce rates have generally gone down in recent decades. However, couples over the age of 50 are the one group that continues to rise, with rates jumping from 10% in the 1990s to 25% in recent years. Experts are predicting that this number will continue to rise. Known as grey divorces, these generally involve couples who raised their family or divorced for a second time. They likely grew apart and may have different goals for how to spend their retirement, whether it is traveling, starting a new business, relaxing, or maintaining the current course as long as they are able.
Grey divorces present a range of emotional and financial challenges. The biggest may be explaining it to the adult children and grandchildren, but the business side of a long-term marriage is tangled, with few individual assets and many questions about dividing assets.
Five issues to consider
Each marriage and divorce is unique, but retirement experts often zero in on specific trouble areas for this age group:
- Spitting the retirement: Regardless of whether one spouse worked outside of the home to support the family, create retirement accounts and Social Security, these will be regarded as marital assets to divided equitably.
- Division of marital assets: The spouse who earned a majority of the money may grumble, but marital assets will likely make up a vast majority of the family estate unless there has been a prenup, postnup, or gifting and inheritance. Determining individual assets and putting a value on them will be a challenge.
- Insurance: Health insurance is a significant concern as folks age, but the spouse who is not the source of employment-based insurance is cut off as soon as the divorce is final. An ex-spouse will often be removed from a life insurance policy as well.
- Not enough: Divorce means supporting two homes instead of one – suddenly what looked like a comfortable retirement could leave one or both scrambling to rebuild a nest egg.
- Throwing a family into chaos: Children will often be in the process of building their careers and raising a family. One parent may feel lost, which can mean the children are supporting that parent or providing a place for them to live.
Family law guidance will be key
The complicated nature of grey divorce often means that an attorney will need to step in and provide legal guidance to ensure that a client’s rights are protected. It likely will be less about custody, and more about determining a plan to ensure that those final years remain golden.