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How divorce may affect the finances of couples over 50

On Behalf of | May 18, 2021 | Divorce

Known as a “gray” divorce, couples over the age of 50 have dissolved their marriages about twice as often as older couples did in the 1990s. Unhappy relationships, longer life expectancies and adult children may have contributed to the increased number of belated splits.

Research from the Social Security Administration reported by Kiplinger’s Personal Finance discovered that nearly 20% of women over 65 live in poverty after their divorce. The SSA found they have less financial security than widowed women or those who remain married.

Spouses may negotiate to divide marital property

Massachusetts divorce laws require courts to divide marital property equitably between each spouse. Marital property includes assets acquired during marriage such as a couple’s home, vehicles and household income. Equitable division, however, does not mean equal; a judge may divide assets according to what appears fair.

Individuals who relied on a spouse’s earnings may negotiate a financial payout through their divorce settlements. A judge may consider the value of each spouse’s contribution to a shared household to determine fairness. The spouse who gave up potential earnings to raise children and take care of a house, for example, may show how those efforts contributed to the family’s income.

Retirement plans may divide equitably

A divorce may include a fair division of an employer-sponsored retirement account such as a 401(k). A non-working spouse may receive a lump sum payout from a working spouse’s retirement plan.

As noted by SmartAsset, a nonworking spouse over 62 may apply for Social Security benefits based on his or her ex-spouse’s employment history. The marriage, however, must have lasted for at least 10 years to qualify for benefits.

With many baby boomers facing retirement, some older Americans may view divorce as a positive step forward. Individuals who plan for retirement may negotiate a more favorable divorce outcome that provides for financial security.