Financial Considerations in Grey Divorce: What You Need to Know Before Signing the Papers
The phenomenon of “grey divorce” – couples splitting up in their 50s and beyond – has doubled since the 1990s. While ending a marriage is emotionally challenging at any age, divorcing later in life presents unique financial complications that require careful consideration before making it final.
Understanding the Financial Stakes
For couples divorcing after decades of marriage, the financial implications can be far-reaching. Unlike younger couples who have time to recover financially, those approaching retirement age face limited earning potential and less time to rebuild their nest eggs.
Key Financial Considerations
Retirement Accounts and Pensions
One of the most significant considerations in grey divorce is the division of retirement assets. Qualified retirement accounts, such as 401(k)s and IRAs, typically require a Qualified Domestic Relations Order (QDRO) to split them properly.
Social Security Benefits
Many people don’t realize that they may be entitled to collect Social Security benefits based on their ex-spouse’s work record. If you were married for at least 10 years, you could be eligible for up to 50% of your former spouse’s benefit amount.
Healthcare Coverage
Health insurance becomes a critical consideration, 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.
Protecting Your Financial Future
- Gather Complete Financial Information
- List all assets and debts
- Collect tax returns from the past 5 years
- Review all insurance policies
- Consider Professional Help
- Consult a financial advisor experienced in divorce
- Work with a certified divorce financial analyst