Divorce can be complicated at any age, but ending a long-term marriage later in life can create some unique financial and legal concerns. When retirement is approaching or is already underway, there may be less time to rebuild savings, replace lost income or recover from major financial decisions.
For couples considering a divorce later in life, it’s essential to understand the financial consequences before making any decisions. A divorce can change where you live, how much retirement income you have, what happens to your pension and how you pay for health insurance.
Retirement accounts may be the most valuable assets
New York follows an equitable distribution system. That means that marital property is divided equitably. Several factors are considered when determining how assets will be distributed, including the length of the marriage, both parties’ financial circumstances, age and health and each spouse’s contributions to the marriage, both financial and non-financial.
People who have spent decades in the workforce often find that a significant portion of their marital assets are in 401(k)s, pensions and IRAs. A retirement account held in only one spouse’s name doesn’t necessarily mean the other spouse has no claim to the marital portion.
Another significant asset is the family home. It’s not unusual for one spouse to want to remain in the home because of emotional ties or familiarity with the community. However, keeping the family home may not make financial sense if the mortgage, taxes, insurance and maintenance consume too much of that spouse’s income.
Health insurance can become a particularly important issue in a gray divorce. If one spouse receives health insurance through an employer, the other spouse may have relied on that coverage for years. That arrangement will likely change with a divorce. It’s essential to understand what health insurance will be available after the divorce and what coverage will cost, especially for someone who is not eligible for Medicare or has substantial medical needs.
Divorce later in life affects much more than your marital status. It’s crucial to speak with a legal representative to understand your rights and options. They can review your circumstances, identify issues that may need addressing and help you work toward an agreement that protects your financial interests.