What Is a Gray Divorce and Why Is It Risky?
While statistics show that the overall divorce rate in the United is at its lowest in 35 years, this is not quite the case for couples over the age of 50. For these older Americans, the divorce rate has doubled since the 1990s; in 2015, roughly 10 in every 1,000 spouses ages 50 and up were divorced. For Baby Boomers over 65, the divorce rate has tripled in the same period.
This has led to a phenomenon that Austin divorce attorney, Daniella Lyttle, refers to as gray divorce. And it comes with serious financial consequences for spouses who are ill-prepared for it.Primary Financial Concerns of Gray Divorce
While a divorce in itself takes a significant toll on your emotional and mental well-being, in a gray divorce, these things are often overshadowed by an even more pressing issue—your financial health.
The reason is simple: “gray” spouses have less time to recover from the loss/es of property division. This is further compounded by what could be an abrupt change of lifestyle caused by having only one source of income, instead of two, to depend on for your daily needs.
Specific financial problems include:
- Dividing the family home. Even if you remove your name from the property title, you are still liable for payments on your joint-mortgage. If your spouse were to miss payments or default altogether, your credit score would take a hit, not to mention you could be liable for tax penalties.
- Looking for a job. If you have been out of the workforce for years, you have to face the very real prospect of looking for a job (even with spousal maintenance) to maintain your quality of life.
- Retirement. You will need a Qualified Domestic Relations Order (QDRO) to divide your retirement assets in your shared 401(k) plans, 457 and/or 403(b) accounts, and pensions. This will be one of, if not your most, pressing concern, because QDRO fees are expensive and one small mistake in filing may require you to start the process and pay the fees all over again.
- Healthcare. If you relied on your spouse’s work-sponsored health insurance, you may have to get your own insurance coverage, which becomes more expensive as you get older.
- Social Security benefits. You may be entitled to as much as 50 percent of your spouse’s Social Security benefits if you meet specific requirements, such as being married for 10 years, not remarrying after the divorce, and being at least 62 years old among others.
If you are over the age of 50 and going through a separation with your spouse, it’s important to discuss your options with an Austin Texas gray divorce attorney to protect your finances and ability to support yourself after the divorce.Resolving the Issues Caused by a Gray Divorce
Preventive financial planning will always be the best defense against money and asset issues caused by a divorce, regardless of what age you are when it happens. It’s a good idea to place contingencies to insulate your finances should the worst happen in your marriage.
And while it may not be realistic at all for many separating spouses, you can also consider not going through a divorce in your older years to avoid these financial altogether. Of course, we also understand that money is not the only issue for divorcing couples. Ultimately, your options depend on your situation.
If you have more questions about gray divorce in Texas, do not hesitate to schedule a consultation with Austin divorce attorney Daniella Lyttle. Get in touch with the legal team of the Lyttle Law Firm to learn more.