Nowadays, more older couples are divorcing.
According to the Pew Research Center, the rate of divorce among couples over 50 has doubled since the 1990s. While each couple has their own reasons for divorcing, almost every couple who pursues a divorce after the age of 50 could face significant financial repercussions.
Here is an overview of the top three reasons a gray divorce can impact someone’s finances so much.
1. Spousal maintenance is almost a given
According to Kentucky law, a few factors determine spousal maintenance, including:
- How long the marriage lasted;
- The standard of living during the marriage;
- Each spouse’s finances and resources;
- The need of the spouse seeking maintenance; and
- The ability of the other spouse to pay.
Nearly all of these factors play a significant role in a gray divorce because of how long the couple was married and the financial dependence they developed during that time. Therefore, it is more likely individuals will receive an order to pay spousal maintenance.
2. Spouses usually have to divide their retirement
Retirement accounts and pensions are usually considered community property. And since Kentucky is an equitable distribution state, couples seeking a divorce will have to divide their retirement in property division based on:
- The value of the retirement account or pension;
- The financial circumstances of each spouse; and
- The duration of the marriage.
When individuals are over 50, they are often getting closer to retirement age. That means they have compiled a significant amount for their retirement. Dividing that with a soon-to-be-ex-spouse can have considerable consequences on their current finances, as well as their retirement plan.
3. Living alone after many years can be financially stressful
After a long marriage, both spouses grow accustomed to relying on two incomes.
Divorce and the division of marital assets can leave individuals in a tight spot financially. On top of that, they might have to adjust to living on their own and relying primarily on their own income. This can be both emotionally and financially stressful.
Thankfully, there are ways that individuals can protect their finances, including their retirement, in a gray divorce, so they can begin the new chapter of their life with confidence.