A divorce that occurs later in life is oftentimes referred to as a “gray divorce.” Whether the couple is married in their 20s or 50s, when an older couple dissolves their marriage, there are certain issues that are different, which younger couples are not faced with. Pension and retirement are of particular concern.
How does a divorce that occurs later in life impact retirement? For couples who have been married for numerous years, they likely made plans to spend the rest of their lives together. Their finances and assets were likely tied together. This occurs because couples have future plans when it comes to retirement. The couples are forced to deal with the idea that these accounts should be split during a divorce. This ultimately could postpone the year of retirement, because a spouse will no longer have enough to retire on their own.
Whether you are a year away or decades away from retiring, there are certain steps to take to ensure your retirement accounts are safe during dissolution. In a high asset divorce, a marital agreement, such as a prenuptial or postnuptial agreement, may outline the division process. Nonetheless, couples should take measures to fully understand their assets, what tax consequences may result if retirement accounts are split, the ways to maximize retirement income, and who owns any life insurance policies.
No matter the age or wealth of a couple, divorce can be a complex and emotional process. Even when both spouses are on board with the divorce, it is still a process that takes time and could significantly impact finances and future plans.