GRAY DIVORCE: DIVORCING AFTER 50

It used to be that retired couples were divorce proof. Once a couple reached retirement, they could count on enjoying the plans they had been saving for and anticipating for decades. Unfortunately, thanks to those revolutionary Baby Boomers’ need to differentiate themselves from their parents, that is no longer the case.

In their youth, Baby Boomers (born between 1946 and 1964) were the largest American generation in history, consisting of almost 77 million. As free-loving thinkers, they led anti-war protests and a fitness revolution, inventing jazzercize, all-inclusive health clubs, and the Jane Fonda workout video. Defending their reputations as trend setters, Boomers are also the first generation to use retirement to enjoy life after the kids are grown and gone. Instead of rocking on the porch, they are traveling, exploring new hobbies, and, on average, living 30 years longer than previous generations.

It used to be that retired couples were divorce proof. Once a couple reached retirement, they could count on enjoying the plans they had been saving for and anticipating for decades. Unfortunately, thanks to those revolutionary Baby Boomers’ need to differentiate themselves from their parents, that is no longer the case. In the last twenty years, the Baby Boomers, have managed to nearly double the divorce rate for couples over the age of 50, obliterating retirement plans and assets along the way.

WHAT ARE THE CONSEQUENCES FOR BOOMERS WHO TOSS DECADES OF MARRIAGE OUT THE WINDOW TO DIVORCE AFTER 50?

Legal fees associated with divorce can dramatically diminish savings. To add insult to injury, people who divorce after 50 don’t have as much (if any) time to rebuild their nest egg. The Texas Family Code says all assets purchased or acquired during marriage are presumed to be community property, subject to a just and right division. This includes retirement assets. Unfortunately, splitting assets to support two households after a divorce, can force one or both spouses to put retirement plans on hold. It can be particularly difficult to recover financially when you divorce after 50. 

Older women often find it very difficult to enter or re-enter the workforce after years at home caring for their families, making it even harder for women to bounce back after the financial devastation of a late-in-life divorce. According to Susan Brown, a Bowling Green State University sociology professor and co-director of the National Center for Family & Marriage Research, when women divorce after age 50, standard of living plunges 45%, while older men only see their standard of living drop 21% after a divorce.

In his article titled, “Divorce is Destroying the Finances of Americans Over 50,” Ben Steverman pointed out the harsh reality found in a 2017 study by Brown’s team: After going through a gray divorce, US women 63 and older have a poverty rate of 27%, which is more than any other group at that age, including widows. 27% is more than twice the 11.4% poverty rate faced by men 63 and older who divorce and nine times more than the 3% rate of couples who stay married.

HOW CAN YOU AVOID THE DEVASTATING FINANCIAL EFFECTS OF DIVORCE AFTER 50?

1. Seek guidance from legal, financial and tax experts. You will need a lawyer well-versed in the delicate and complicated aspects of gray divorce. It is also prudent to meet with your financial planners to ascertain the impact of divorce on your financial health and adjust your financial plans accordingly; as well as your accountant to understand the tax implications of divorce.

2. Seek spousal maintenance, where eligible. The Texas Family Code states a court may order the lesser of $5,000 per month or 20% of your spouse’s gross monthly income in spousal maintenance for up to five years if you will lack sufficient property (including separate property) to provide your minimum monthly reasonable needs after divorce AND your spouse was convicted of or received deferred adjudication for an act of family violence against you or your children during the marriage within 2 years from the date you filed for divorce or while the divorce is pending

You can also be awarded up to 5 years of spousal maintenance if you were married to your spouse for over 10 years and lack the ability to earn sufficient income to provide for your reasonable needs (7 years for couples married 20 – 30 years; and up to 10 years for couples married longer than 30 years) OR you can receive spousal maintenance indefinitely if you are unable to earn sufficient income to provide your minimum reasonable needs because of a physical incapacity or mental disability OR you are the custodian of a child of the marriage of any age who requires substantial care because of a physical or mental disability that prevents you from earning sufficient income to meet the minimum reasonable needs. 

It’s important to note that there is no longer a taxable implication for the payor or recipient of spousal maintenance and maintenance will terminate if you remarry, if the court finds you are living with a person you are dating, or upon the death of you or your former spouse.

3. Claim social security spousal benefits. You can receive benefits as a divorced spouse on your ex-spouse’s social security record, even if you remarry and your current spouse is collecting benefits based on his/her record. To be eligible, you must have been married at least 10 years; be at least 62 years old; not be currently married; and your ex-spouse must be eligible for benefits and currently be receiving benefits or, if your ex is eligible, but has not applied, you can apply for ex-spousal benefits if you have been divorced at least two years.

If your ex dies and you are unmarried, you can collect benefits as early as age 60 as a surviving divorced spouse. If you are disabled, you can collect surviving divorced spouse benefits as early as 50.

4. Know your estate and provide info to your beneficiaries. After a divorce, you’ll need to make a list of all of your accounts, logins and passwords and keep it in a safe place. Do not print it out and carry it with you or store it in your vehicle. You will also want to create or update your will, get financial and medical powers of attorney, and execute a physician’s directive.

5. Adjust to your new normal. You are a Baby Boomer – you revolutionized exercise, so start exercising; you retired to enjoy life after kids, so go have fun! Get a hobby, reconnect with friends and family, and adopt/rescue a pet.

IT’S NOT ALL DOOM AND GLOOM

Fortunately, it’s not all doom and gloom for those of you who managed to reach your retirement savings goals. According to Kathy McCoy’s September 2018 post titled “7 Key Facts About Divorce After Long Marriages,” on PsychologyToday.com, relative wealth can be a protective factor against gray divorce. McCoy explained, “it may well be that the financial stresses of job insecurity and unemployment can tear some midlife marriages apart. It may also be that more affluent couples have more to lose in a divorce, or that the absence of financial woes can keep a less-than-ideal marriage viable. It may be, too, that those with more resources have more options — options like marriage counseling or building essentially separate lives with busy work schedules.”

Shared from Boudreaux & Hunter, LLC August 26, 2019 Blog