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A look at the financial impact of gray divorce

Divorce rates for people age 50 and above have doubled since 1990 and the rate for those age 65 and over has tripled, according to the Pew Research Center. But divorce in retirement presents financial challenges that most married couples will avoid.

For instance, so-called “gray divorce” has an impact for many on Social Security retirement benefits. In general, a person can claim benefits based on their ex-spouse’s work history if they were married at least a decade (but are not currently married) and that former spouse is eligible for benefits and is at least 62 years old.

If all of those boxes are checked, that person can receive 50 percent of the former spouse’s primary benefit rate at full retirement, writes Jamie Hopkins, director of retirement research for the financial services firm Carson Group. It should be noted that claiming those benefits does not impact the ex-spouse’s benefits.

Another important financial issue for older divorcing couples: how to distribute the assets in retirement accounts. Because the accounts can be among the most valuable assets an older couple holds, disputes over IRAs and 401(k)s can become heated.

Hopkins noted in a recent column for Investment News that the accounts can be divided in divorce with a qualified domestic relations order. In divorces in which valuable retirement accounts are an issue, it’s important to have on your side a family law attorney experienced in protecting your rights and interests in property division matters.

Hopkins wrote that “dividing these assets can require a lot of negotiation, paperwork and careful wording.”

Of course, home equity is the most important asset of all for most retirees. Again, figuring out whether to sell or keep the home or divide the equity are all questions that are undertaken in divorce with a qualified lawyer who understands Louisiana family law and knows Lake Charles courts.

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