According to Pew Research Center, divorce has fallen 21% since 1990 for couples between the ages of 25-39. During that same timeframe, divorce for couples between the ages of 40-49 has risen 14%. However, in a shocking twist, divorce in couples over the 50-year age bracket has doubled to a whopping 109%. This phenomenon called a “gray divorce” is prompted by baby boomers and leads to some serious late-life financial implications. But what are some of the most common financial pitfalls and how can your Michigan divorce attorney potentially help you survive your gray divorce?
Recovery Time Is Significantly Reduced
People who divorce earlier in life often have an easier time recovering and moving on financially. But after the age of 50 that post-divorce monetary loss can be incredibly difficult to recoup. Rather than looking forward to a relaxed retirement, suddenly divorcees find themselves at risk for entering poverty status. In fact, research shows that 27% of gray divorce women end up at the poverty level compared to 11% of their male counterparts.
Retirement Plans Become Your Primary Asset
Retirement plans are considered joint property in a marriage, so they’ll need to be divided during a Michigan divorce. Women tend to have longer and more costly retirement plans than men, but female baby boomers tend to earn and save less than their male spouses. Considering an estimated 22.3% of women over the age of 50 live alone compared to only 12.5 of men it’s no wonder more women end up struggling after their gray divorce. However, that upfront knowledge and ongoing advice from your Michigan divorce lawyer can help you strategize to live comfortably as a single senior.
Social Security Benefit Rules Come into Play
The courts don’t divide social security benefits like they divide marital assets. However, there are certain social security rules that can affect your post-divorce finances. If you’re at least 62 years old and your marriage has lasted a decade or longer, you’re eligible to collect part of your ex-spouse’s benefits. That’s great news for those who were out of the workforce for whatever reason during the majority of their marital years.
Debt, Credit, and Medical Needs Must Be Considered
Financial independence during the marriage is crucial for future planning. But if that wasn’t possible or didn’t occur for some reason, at least know where all the debt and insurance documents are prior to the divorce. Make copies of all records including your medical and life insurance info for your spouse. Alimony and medical payments can be included in the settlement, and you’ll still likely be listed as the beneficiary for a while on your ex-spouse’s life insurance. Be sure to remove your name from loans and joint cards you don’t use, however, as you may otherwise be held responsible for payment down the road.
What About the House?
Plans change, so the original concept of selling the house and moving to a tropical location may no longer be on the table. But that doesn’t mean you have to be burdened with a bulky and expensive reminder of your past. At the same time, don’t walk away from an asset without knowing how it can benefit your future. Even if the real estate market continues to struggle, your homestead can potentially improve your financial structure.
You might opt to include it in a settlement in lieu of or for reduced spousal support. You could both hold onto the property and opt to sell it when the market improves. Or you could even keep it and rent it out for extra monthly income. You have options, and your Michigan divorce lawyer is just a call away to remind you there is life after a gray divorce.