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What are some of the risks and rewards of a gray divorce?


This article looks at the risks and rewards of a gray divorce, with a focus on retirement planning.

Gray divorce is a term used to describe how an increasing number of older Americans, many of whom have been married for decades, are choosing to get divorced. As Forbes reports, since 1990 the divorce rate for those aged 50 and over has doubled, despite the fact that divorce has actually declined for all other age demographics. There are many theories as to why gray divorce is on the rise, with longer life expectancies, greater financial independence for women, and less social stigma for divorce being the most commonly cited causes. Below is a look at what the risks and rewards of divorcing later in life are.

Retirement plans in doubt

Undoubtedly, the biggest risk facing gray divorcees is financial. People who are divorcing later in life are often either retired or are planning on retiring soon. As a result, if a divorce proves particularly costly there is precious little time to rebuild one’s financial portfolio.

Furthermore, for many people in long-term marriages, it is often the case that one spouse is primarily responsible for the financial decisions. That can leave the other spouse unprepared to deal with their new financial independence and they may not even have a good idea of what their marital estate is worth.

Addressing risks and reaping rewards

However, the financial risks of a gray divorce are manageable, so long as those going through such a divorce do their due diligence and plan beforehand. Knowing what is up for division during a divorce and what one will need in order to live comfortably are fundamental to thriving post-divorce.

For example, as CNBC points out, many retirement assets, including 401(k)s, pensions, and individual retirement accounts, can be divided in divorce, even if they are only in one spouse’s name. To divide a retirement account, a Qualified Domestic Relations Order (QDRO) will likely be required. This is an important legal document that must be prepared by an attorney.

Once one knows what assets can be divided, it is important to know what one will need for retirement. For many people, this will require a crash course in budgeting and personal finances. Remember, also, that while some assets may appear valuable on paper, they can come with steep expenses. The family home, for example, may be a couple’s biggest asset, but one that could quickly lead to income getting eaten up by maintenance costs, property taxes, and upkeep. In many cases, downsizing to a more affordable home, while difficult at first, will set one up for greater success and independence later on.

Family law help

When getting divorced there is often just once chance to get the division of property right. An attorney can assist those going through a divorce in a number of ways, such as by clarifying for them what assets they may be able to pursue and how to go about negotiating a divorce settlement that sets them up best for a comfortable retirement.