Gray divorce is the term for divorces involving older couples, generally meaning couples over the age of 50. Gray divorce rates are on the rise for various reasons and if it looks like a gray divorce is in your future, you have some financial planning to do.
Divorce in Georgia involves splitting marital property. Georgia law requires that marital property be split equitably, or fairly.
Property division is often the most complicated aspect of a divorce, especially in a gray divorce. Since gray divorces do not usually involve custody issues, the biggest issues in a gray divorce involve property division.
Additionally, younger married couples have often not accumulated much property yet. The value of their retirement accounts may be modest, leaving property division simpler.
However, older couples who have spent many years or decades together have likely amassed a substantial amount of property, including real estate, vehicles and significant retirement accounts. They are also nearing retirement age – if they haven’t retired already – and so it will be difficult for them to earn more assets after the divorce. This is why a gray divorce requires smart financial planning.
Retirement plans
Prioritize your retirement plan. If you and your spouse both have retirement plans of roughly the same value, you could choose to both keep your own. But if your spouse has no retirement plan, or a plan with significantly less value than yours, you might be required to give your spouse a portion of your plan.
While you might not be able to avoid this, start building back your plan as soon as you can. Consider increasing the amount you set aside to put into your retirement plan.
This might not be as easy as you initially believe since a divorce usually comes with additional daily expenses. You could now be paying for the cost of a home and monthly bills on your own. Be realistic about the idea that you may need to cut back on expenses and live a more frugal lifestyle for a while.
Learn to cut back
Most of us have expenses that we could cut or reduce. Make a list of all monthly expenses and figure out which ones you could live without if necessary.
Re-evaluate your plans and traditions. This could include delaying your retirement or foregoing the two-week vacation you take every summer.
If this sounds incredibly depressing, remember that you are trying to reduce expenses to live comfortably, not remove everything enjoyable from your life entirely. For example, if you cannot bear the thought of not taking your summer vacation, consider making it a one-week vacation instead of two.
What if you didn’t work?
Gray divorce brings a whole new set of complications if you are the one with no retirement or perhaps no job. While you may want to get back into the workforce, if you have been out of it for many years, your chances of obtaining a job that allows you to maintain the same lifestyle you are used to might be low.
Evaluate the best options for an equitable property division and explore the possibility of alimony. Between receiving an equitable share of marital property and some alimony, you might be able to live on your own, although more frugally.
Financial planners are not used in every divorce but they are often a good resource to have during a gray divorce. A complex financial situation requires professional advice and guidance.