So-called “gray” divorces are on the rise in Pennsylvania and across the country. Couples over 50 now divorce at twice the rate they did a few decades ago, and divorces in this age group now constitute a quarter of all divorces.
Divorce always comes with some disruption, but people nearing or past retirement age may need to address added concerns, especially financial issues. Older couples have far less time to recover financially after divorce, for one thing, and careful planning is essential.
Financial Steps to Consider When Divorcing Later in Life
One of the first steps is to establish an independent financial history, especially for a spouse who has not worked extensively outside the home. Joint bank and credit accounts should be closed to help ensure that each individual is responsible for his or her own money and credit. Therefore, each spouse needs to open individual accounts in his or her name only.
Often both spouses are legally responsible for the mortgage of the family home, but, living arrangements and the financial obligations that go with them will likely be divided. For some divorcing couples, it may be more financially practical to sell the family home and split the proceeds rather than have either spouse stay in the home and carry the mortgage burden alone.
Retirement and pension accounts are also a concern. Divorcing spouses may not want to share retirement accounts and pension funds they’ve accumulated over the years, but some couples may have to. While Pennsylvania is not a community property state, family courts will still want a couple to divide assets fairly and equitably, and retirement savings and pensions can be subject to division. Retirement plans that a couple may have made together will have to be seriously reconsidered and possibly scaled-down because each party may have less money available for retirement as a single person.
A common mistake older couples make is failing to look at all their assets and divide them in a balanced fashion. Trading off ownership of the home for ownership of an IRA can leave both parties in a precarious situation. As property and stock values fluctuate, it may be better for both spouses to equally share the risks and benefits of owning various types of assets.
People over 50 can especially benefit from competent legal advice early in the divorce process. Unaffected by the emotional issues, an attorney will be able to clarify the practical, financial concerns that can be pitfalls in a gray divorce.