Surviving financially after gray divorce in PA takes careful planning
“Gray divorce” after age 50 introduces distinct financial difficulties, such as dividing complex assets to support two separate retirements.
Due to factors such as longer lifespans and changing social norms, divorce at a later age is becoming more common among couples in Wyomissing, Pennsylvania. One study found that “gray divorce,” or separation after age 50, now accounts for one-quarter of all divorces, according to CNBC. These separations can introduce many unique challenges for couples, especially from a financial viewpoint.
Navigating a gray divorce successfully often takes careful planning.
With retirement approaching, people who divorce later in life often have little time to make up for the financial loss. Even couples with enough money to fund a joint retirement may face challenges, according to USA Today.
Experts estimate that funding two retirements costs 30 to 50 percent more than funding a shared retirement, since many costs, including living, assisted care and travel expenses, are doubled between two households.
After a gray divorce, many people must alter their retirement plans. A person might choose to return to work, delay retirement or live more frugally during retirement. Parents may also need to accept that they will not be able to give their children as much support or leave them as much of an inheritance as planned.
Unfortunately, the basic financial issues that come with gray divorce can be exacerbated when spouses do not understand their rights to marital property during a Pennsylvania divorce.
Older couples often have accumulated more complex assets than younger couples. These assets might include property, stocks or retirement accounts.
In Pennsylvania, any property acquired during the marriage, aside from gifts and inheritances, is considered marital property. This property is subject to equitable distribution laws during divorce, unless spouses can agree to another type of division.
According to CNBC, when older spouses divide marital property and plan financially for life after divorce, they should consider the following factors:
- Dividing retirement assets without any unnecessary losses – a court-ordered qualified domestic relations order (QDRO) can divide a pension plan or 401(k) without any tax loss.
- Deciding whether keeping the house is feasible – although many spouses feel emotionally attached to the marital home, costs such as upkeep and property taxes may make keeping it a financial burden.
- Collecting Social Security Disability benefits – if a marriage lasts at least 10 years, a person who is older than 62 may collect half the amount of his or her ex-spouse’s Social Security retirement or disability benefit. The retired or disabled spouse can still collect a full benefit amount.
It’s important for spouses to consider these factors early. Spouses may even want to evaluate the availability of Social Security benefits before finalizing the decision to divorce, since delaying the divorce may help one spouse qualify for an ex-spouse’s benefit.
It’s advisable for each spouse to meet with a financial planner as early as possible to start planning for life after the divorce. Considering the complexity of the marital property and the potential consequences of an unfavorable settlement, it’s also essential for spouses to work with a divorce attorney who can provide advice and guidance during the separation.