With the social stigma around divorce decreasing, many older couples now find it easier to end an unhappy marriage. However, gray divorces can result in more financial repercussions than divorces that happen earlier in life.
A gray divorce often occurs when a person is already past their peak earning years. Because there is less time to recuperate the financial losses resulting from gray divorce, many people face a significant decrease in their standard of living.
Check your finances
Divorce can be financially devastating, so creating a plan of action is crucial before pushing through. Here are some important points to focus on:
Taxes
Divorcing at this age may mean the couple has acquired several marital properties, which can complicate property division and its tax implications. To avoid surprises, speaking with an attorney and tax adviser could help.
In addition, the spouse who is paying the alimony can write it off on their taxes, while the spouse who is receiving it may have to file it as income and pay taxes.
Insurance
One key component of a divorce is life insurance, especially if one spouse relies on the other for income. The court may require the spouse paying alimony or child support to identify the other spouse as a beneficiary. This safeguards the surviving spouse’s financial security if the paying spouse dies.
Anyone counting on receiving payments should take steps to verify that they are listed as the beneficiary.
Retirement account
In Texas, both spouses may be eligible to claim an individual retirement account if it was acquired during a marriage. Unless possessed or acquired as a gift before the marriage, there is a chance the court will award it to the other spouse.
Social Security
Divorcees who are 62 or older, have not married again, have been divorced for at least two years, and have been wed for more than 10 years are eligible for half of their spouse’s Social Security benefits.
The possibility of financial collapse following a divorce could make the decision to end a marriage much more difficult. Those who are thinking of getting a gray divorce need to tread carefully and avoid making rash decisions. In such tough times, counting on the legal counsel of a divorce attorney may help.