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Gray divorce often throws finances, retirement plans off track

Gray divorce can be a financial burden, with retirement costs, limited job opportunities and complex asset division all representing potential challenges.

"Gray divorce" has become a familiar term for many people in Troy. These divorces, which involve couples who are older than 50, are not uncommon today. The Washington Post reports that divorce rates among most age groups have stabilized in recent years, but divorce rates among people older than 50 have doubled since 1990. One-quarter of recently divorced U.S. couples belong to this age group.

Since older couples enjoy longer retirements and longer lifespans, gray divorce can give divorcees the opportunity to get the most from their later years. Unfortunately, gray divorce can also take a steep financial toll, which makes planning for economic challenges after the separation critical.

Unique financial burdens

There are a few reasons that couples going through gray divorces face unusual challenges compared to their younger counterparts, according to USA Today. These include:

  • Time constraints - Older couples simply do not have as many working years to recover from the financial losses associated with divorce.
  • Individual retirement - Funding two separate retirements, which is an immediate concern for many older couples, may cost 30 to 50 percent more than funding one shared retirement, since expenses such as housing can no longer be shared.
  • Unique expenses - Older couples may face other distinct expenses that younger couples may not, from seeking medical care to supporting their grown children.
  • Employment status - Older spouses who stopped working or took less demanding jobs may find it difficult to reenter the workforce or secure positions that generate adequate income.

Statistics from research into the phenomenon of gray divorce reflect these distinct challenges. According to the Washington Post, divorced couples that are older than 50 have, on average, 80 percent less wealth than married couples in the same age group. This makes an appropriate divorce settlement a top concern for most couples that are divorcing later in life.

Fairly dividing complex property

According to The New York Times, older couples often have accrued complex marital assets, such as pension plans, 401(k)s, stock options and other retirement accounts. Given the financial challenges of gray divorce, a fair division of these assets is crucial. However, many older spouses may fail to understand or protect their rights to marital property, particularly complex marital property. This decision can potentially cost spouses thousands of dollars in the long term.

Some spouses may be averse to seeking professional help during a gray divorce, especially if they are trying to minimize the financial expenses associated with the divorce. However, partnering with an attorney is the best way to ensure that no marital assets are overlooked or improperly divided. Anyone preparing for a gray divorce should contact an attorney early on to discuss property division and other concerns.

Keywords: divorce, retirement, assets

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