Though people are living longer these days, they aren’t always happy in their marriages. Earlier generations tended to stay married, but more and more older folks make the choice to divorce. This is often called “gray divorce.”
If you are older than 55 and have considered divorce, you are not alone. People age 55 and older have increasing rates of divorce, while most other demographics show a decrease. Divorce at this age presents more potential financial challenges than it does for younger people. Experts have advice for anyone who is considering ending his or her marriage about how gray divorce can affect your finances.
How gray divorce affects assets
California is a community property state, meaning any property acquired during the marriage is divided evenly. Property in this instance includes actual property, like a home, as well as bank accounts, debts and other financial assets. However, an inheritance might be a different matter. If the inheritance benefited both spouses and became part of shared marital assets, it might be subject to division.
Alimony is another part of assets and income. If one person makes significantly more money than the other, that person may have to pay him or her alimony. In a gray divorce, that amount may be much higher since, presumably, the higher-income spouse has been working longer. Alimony can also take other work benefits into account such as stock options and company ownership.
How gray divorce affects future income
The assets two people currently share aren’t the only matters subject to division. People in a gray divorce have to consider future income, like retirement accounts, life insurance and Social Security payments. In the case of Social Security, one ex-spouse may qualify to draw from the other’s earnings. If the divorce decree includes alimony or child support payments, the paying spouse may also need a life insurance policy to ensure money is still available if the payer passes away. Retirement accounts or pensions will generally be part of asset division.
If you are an older person thinking about divorce, none of this should dissuade you. Though it might be a complicated process, it’s an important one and one that qualified professionals can assist you with. Just because you’re over a certain age doesn’t mean you can’t have a fresh new start.