Whether she broke the news to you in person or via the divorce papers served, either way, it hits you like a lightning bolt. After decades of marriage, your spouse wants a divorce. Now you must pick up the remnants of your marriage and toss them in the waste basket in this gray divorce situation.
The stormy seas toward resolution are coming and include a microscopic look at your finances, which will take a big hit. The lifestyle to which you have grown so accustomed will change as your expectations of a smooth-sailing retirement with your spouse have gone up in a puff of smoke.
You may even run out of money
While the U.S. divorce rate has declined in most age demographics, it is different story for people age 50 and older. The divorce numbers among people in this category have doubled since the 1990s, according to the Pew Research Center. More startling, the divorce rate among people 65 and older has nearly tripled since 1990.
The retirement you envisioned is not going to happen. Suddenly another fear strikes: You may run out of money. Here are the financial considerations to consider in gray divorce:
- Your home: Of all your assets, this is the one that will most likely be sold and the proceeds split between the former spouses. However, if you do buy your former spouse’s share and remain in the home, you must consider long-term costs of living there as well as tax implications.
- Retirement accounts and pensions: The money accumulated in IRAs, 401(k)s and pensions during the marriage are marital assets and split accordingly. Pre-divorce, this money was earmarked for living expenses for one household. Now, the households are two. As a result, this nest egg will shrink significantly.
- Alimony: This remains a possibility to pay alimony to your former spouse, who may not have worked during your marriage, worked part-time or gave up a career to raise your children.
- Health insurance: You need coverage, and the expenses likely will be much higher than for younger divorcing couples.
In gray divorce cases, people must understand the financial implications and how they affect them for their remaining years.