Gray divorce: A financial burden for many Pennsylvanians
Over the last few decades, “gray divorce,” or divorce after age 50, has become increasingly common among couples in Reading. Since 1990, the national gray divorce rate has doubled, according to the New York Times. In 2011, gray divorcees represented one-quarter of all people divorced in the last year, and more people over age 50 were divorced than widowed.
These increasingly common divorces can create various distinct challenges. For instance, the financial difficulties that come with most divorces are greatly amplified for older couples. Planning carefully for these challenges is essential for Pennsylvanians who are divorcing at a more mature age.
Any newly divorced couple will find that living independently is less economical. Besides having to maintain two households, a divorced couple loses out on tax benefits, spousal benefits and discounts for bundling services, such as insurance policies. The increased costs of living independently are especially problematic for older people, who must prepare for retirement, healthcare costs and other special expenses.
Financing two retirements can cost 30 to 50 percent more than funding a shared retirement, according to USA Today. Many older couples that were previously on track to retire must return to the workforce or delay retirement. People who were not on track may have to take these measures and additionally plan for a more frugal retirement.
Even in a fairly amicable divorce, dividing assets to support two retirements is challenging. The task can be even more difficult in a contentious divorce. However, given how little time older spouses have to recover from financial mistakes or losses, ensuring a fair settlement is crucial.
Property division considerations
Pennsylvania follows equitable distribution laws when dividing property. Property acquired during the marriage – with the exception of gifts or inheritances – is divided in a fair but not necessarily equal manner during divorce. Complex assets accrued during the marriage, including pension plans, 401(k)s and other retirement accounts, are all considered marital property.
Many couples may not understand their rights to complex property, or they may choose not to fight for what they are legally entitled to, according to the New York Times. However, failing to claim due assets can be costly in the long run, especially for economically disadvantaged spouses.
Spouses who left the workforce or gave up other opportunities in support of the marriage should emphasize those losses during the divorce proceedings. State divorce courts consider various factors when dividing assets, including:
- Each spouse’s age, health, education, skills and ability to find gainful employment.
- The debts and financial needs of each spouse.
- The value of any non-marital assets that each spouse owns.
- Each spouse’s contribution to marital property, the career or education of the other spouse and the marriage as a whole.
- The marital standard of living.
It can be easier for spouses to demonstrate their financial need if they have an accurate idea of the expenses they will face after the divorce. The New York Times recommends that spouses hire a financial planner early in the divorce process for expert help readjusting budgets and retirement plans.
Spouses preparing for divorce should also consider meeting with an attorney early on. An attorney can advise a spouse of his or her rights and help the spouse pursue a fair settlement, which can reduce the financial impacts of a gray divorce.