While it is no secret that divorce rates have skyrocketed, rates of divorce in individuals over 50 have grown at a faster pace than any other demographic in recent years. According to data from the U.S. Census Bureau:
Divorce rates have nearly doubled in U.S. adults ages 50 and up
Divorce rates have roughly tripled in U.S. adults ages 65 and up
The numbers illustrate that it is becoming increasingly more common for couples to leave the marriage after their children leave the home. This trend has been labeled as “gray divorce”, and it carries a unique array of financial implications. While no divorce is ever “straightforward”, a divorce amongst two people nearing retirement typically involves additional complexity.
Here are some specific issues that are often unique to “gray divorce”:
Complicated Compensation:
Often times, individuals who are in the later stages of their careers have a far more complex compensation structure. This can involve stock options, performance bonuses, and even travel reimbursement or allowances. These added layers make it even more crucial to work with professionals who are able to appropriately evaluate any and all forms of compensation.
Social Security Concerns:
Many individuals in this demographic are fast approaching, or already collecting social security benefits. In these cases, it is very important to be aware of the specific stipulations (length of marriage, current marital status, age, etc.) that may allow for one spouse to collect on the former spouse’s benefits. Additionally, this impending change in income can impact what is deemed as an appropriate amount of time for a spouse to receive support.
Division of Assets:
Typically, a couple that is divorcing later in life will have accrued more assets. This can create a more complex process to ensure that they are divided equally. While traditional retirement plans are fairly easy to divide using a QDRO, often pensions and stock options programs are far more difficult to divide. Additionally, the couple may have amassed multiple properties. While these properties may seem desirable in a settlement, they typically come with additional fixed expenses.
Determining Fair and Equitable Spousal Support:
Determining spousal support is traditionally easier when the parties have a long earning career ahead of them, and expenses are projected to remain fairly constant. However, as a couple approaches retirement, income is less predictable, and expenses can vary. This makes the topic of spousal support a far trickier issue. It is important to fully understand the entire financial picture of both parties to determine whether either spouse has a deficit that requires supplementing and if the other spouse has the capability to pay.
A “gray divorce” can often create more questions than answers, and they can make a difficult situation even worse. It is even more important for these individuals to assemble an advisory team to help them achieve appropriate solutions to these matters. This begins with an experienced and knowledgeable divorce attorney and typically involves many other professionals as well.
A financial advisor can offer comprehensive financial analysis on these issues and many more, creating peace of mind in an otherwise messy situation. If you have any questions pertaining to gray divorce, or any other divorce-related financial question, please feel free to contact us.
-Josh VanFelteren, MBA
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