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Financial Considerations in Grey Divorce: What You Need to Know
The phenomenon of “grey divorce” – couples splitting up in their 50s, 60s, and beyond – has doubled since the 1990s. While ending a marriage is never simple, divorcing later in life presents unique financial challenges that require careful consideration and planning. Here’s what you need to know to protect your financial future during a grey divorce.
Retirement Savings and Social Security
One of the most significant concerns in grey divorce is the division of retirement assets. After decades of saving together, splitting these funds can dramatically impact both parties’ retirement plans. Qualified Domestic Relations Orders (QDROs) become crucial tools in dividing 401(k)s and pension plans equitably.
Social Security benefits also require careful consideration. If you’ve been married for at least 10 years, you may be eligible to receive benefits based on your ex-spouse’s work record. Understanding these rules can make a substantial difference in your post-divorce income.
Healthcare Coverage Concerns
Health insurance often becomes a critical issue, especially if one spouse has been covered under the other’s employer-sponsored plan. With Medicare eligibility beginning at 65, those divorcing earlier need to factor in the cost of private health insurance until Medicare kicks in. COBRA coverage is available but can be prohibitively expensive.
Steps to Protect Your Financial Future
- Gather complete documentation of all assets and debts
- Consider working with a financial advisor who specializes in divorce
- Update estate planning documents and beneficiary designations
- Create a new budget based on post-divorce income
- Review and adjust retirement plans
Professional Support Network
- Divorce attorney
- Financial advisor
- Tax professional
- Estate planning attorney
- Insurance specialist
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