Financial Considerations in Grey Divorce: What You Need to Know
The phenomenon of “grey divorce” – couples splitting up in their 50s and beyond – has doubled since the 1990s. While ending a marriage is never easy, 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 building nest eggs together, splitting these accounts can dramatically impact both parties’ retirement plans. Qualified Domestic Relations Orders (QDROs) are often necessary to divide 401(k)s and pension plans without incurring penalties.
Social Security benefits also come into play. If you were married for at least 10 years, you might be eligible to receive benefits based on your ex-spouse’s earning record. This can be particularly important for spouses who left the workforce to raise children or manage the household.
The Family Home Dilemma
The marital home often represents both parties’ largest asset and can be emotionally charged. While keeping the house might seem appealing, carefully consider whether you can afford the mortgage, maintenance, and property taxes on a single income. Sometimes, selling the home and splitting the proceeds provides a cleaner break and better financial foundation for both parties.
Healthcare Coverage
Insurance coverage becomes a critical consideration, especially if one spouse was dependent on the other’s employer-sponsored health insurance. 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.
Professional Support
Given the complexity of grey divorce, working with experienced professionals is essential:
- Divorce attorney familiar with grey divorce issues
- Financial advisor
- Tax professional
- Estate planning attorney
- Therapist or counselor for emotional support
Resources
United States Resources
Canadian Resources