Couples close to and past the retirement age may consider divorce for a number of reasons. Once the children leave the home, for example, they may find they no longer have much in common with one another. Others may have only avoided divorce to prevent trauma for the children. Still others experience issues related to failing health or even infidelity.
Whatever the cause, a so-called gray divorce doesn’t have to mean disaster for you financially. If you approach the divorce in a realistic manner and plan carefully, you can balance the desire to end your marriage with your need for adequate financial resources in your retirement.
You may dip into savings to pay for the divorce
The more contentious your divorce becomes, the more expensive it may be. People with substantial assets may feel that they have more to battle over, but they also have more to potentially lose in a protracted court divorce.
Mediation could be a cost-effective way to minimize the cost of your divorce. Doing so is definitely in your favor. Many people have to pull money out of savings, investment or retirement accounts to pay for the costs of a divorce.
You’ll have to split your retirement or pension with your ex
Tennessee courts work toward equitable distribution of your marital assets. That generally includes any assets or income acquired during marriage. Regardless of who earned or obtained an asset, it belongs in part to both spouses as marital property. Any and all marital property is subject to division by the courts, including pensions.
Even if your retirement account is in your name or you have an employer-sponsored or military pension, your spouse may very well receive a portion. If not, the courts may allocate other valuable assets to your spouse to balance out the asset division process.
You may need to rethink your retirement plans and expectations
When you initially planned for retirement, you likely assumed that you and your spouse would share a home. That can reduce overall expenses. You may also have planned to have income from two retirement plans or even Social Security benefits as you age. Now, however, you will have to support two households with the same amount of savings and income.
Depending on your age and income, divorce could mean adjusting your retirement plans. Sometimes you may need to work for a few more years to rebuild the funds you lost in the divorce. Other times, scaling back plans to travel or changing your living arrangements could help.
Of course, ensuring that you receive a fair portion of the marital assets can also make a difference. Be sure to carefully review your assets and debts before filing for divorce so that you have an idea of what to expect. Don’t make a major divorce mistake and compromise your financial security later on!