Gray Divorce: Special Concerns Faced When Older People Split Up

Divorces among people in their 50s or older is a growing trend in the United States. Unlike marriage dissolutions involving younger spouses, “gray divorce” is less about parenting issues and more about long-term financial stability.

There are multiple reasons for the surge in gray divorce, but they center mostly on people reassessing the value of their marriage as they become empty nesters and look towards richer lives in their remaining years. They may have come to realize that they have divergent interests, different financial goals and varying views on how to structure and manage their retirement. There are cases of infidelity when a spouse looks for a more fulfilling relationship. Also, mental health issues can arise that make a spouse too hard to live with. And with women more and more having independent means, many feel more able to leave marriages that no longer meet their emotional needs.

Regardless of the reason, a gray divorce can have implications for both spouse’s financial situations. Although long-married people may have built up substantial resources, dissolving a marriage can impact a person’s standard of living during retirement. Elder divorcees may struggle with generating sufficient income to support themselves, especially if one spouse spent years out of the workforce caring for children or managing the household. While maintenance (alimony) may provide relief, courts examine factors such as age and earning capacity when determining the amount and duration of an award. Thus, the duration as per the maintenance guidelines may be less than the guidelines based upon the ages of the parties. However, the Courts will consider many factors including but not limited to the amount of the equitable distribution, the amount of social security, cost of health insurance, amount other considerations.

The fate of the couple’s home can present a challenge. As marital property, it is subject to equitable distribution. One spouse might be awarded the home, but this means compensating the other in kind for their share of the equity. The spouse keeping the home must have sufficient income to shoulder the multiple costs associated with ownership, such as taxes, mortgage payments, insurance, utilities and maintenance.  If the parties cannot agree on a buy out on the home, the Court will likely direct the sale of the home. 

Gray divorce involves division of retirement accounts and pensions, which may be substantial. Spouses who are receiving benefits must consider how those income streams will be allocated or shared. There may also be tax implications, such as when one spouse liquidates assets transferred to them or withdraws funds from a retirement savings account before reaching retirement age. A qualified domestic relations order (QDRO) may be needed to avoid penalties for early withdrawals.  Most commonly, when dividing retirement accounts, they are either rolled over and where a roll over is not permitted, a QDRO is granted so that same is transferred tax free to the other spouse. It should be noted that even though the transfer is tax free, a withdrawal may be subject to income taxes, as well as early withdrawal penalties depending upon the recipient’s age. 

Medical insurance may be impacted if one spouse previously relied on the other’s employment-based health coverage. That spouse may not be able to afford private insurance coverage on their own, and the loss of shared resources can complicate planning for future medical needs or assisted living, especially since health care costs tend to increase with age.  This is a further consideration in maintenance and the equitable distribution of assets. 

Divorce can affect the amount of Social Security benefits available. Lower-earning, dependent and non-working spouses aged 62 or older may be eligible to receive benefits based on a former spouse’s earnings record if the marriage lasted at least 10 years.  This amount is limited to one half of the former spouse’s award. 

Older spouses considering a breakup should seek the assistance of an experienced divorce attorney to deal with these diverse issues. 

Jakubowski, Robertson, Maffei, Goldsmith & Tartaglia, LLP in St. James, NY represents Long Island residents in all aspects of divorce. Schedule a consultation by calling 631-360-0400 or contacting us online.