Gray divorce in Tennessee: Preparing for retirement

It is highly likely that you know someone in Montgomery County who is divorced, going through a divorce or thinking about it. There are many reasons why people divorce and it has become quite common for couples to call it quits and start over as single people.

Gray divorce

A study from Bowling Green University states that adults over the age of 50 are divorcing at a higher rate than ever before. In 2010, over 600,000 people in this age range were granted a divorce and the numbers are expected to climb over the next several years. The study did not attempt to explain why older people are divorcing but only discusses this new trend, termed gray divorce.

While older couples generally do not have to worry about child custody or child support, they do face some unique challenges. The biggest one is retirement, since by the time a person reaches their 50's they are often starting to wind down in their career. USA Today points out that divorcing later can have a significant impact on spouses, especially wives. The reason for this is because many wives have stayed at home to raise their children and may have limited work skills or no college education.

Retirement plans are marital property

Forbes reports that many spouses, women especially, do not understand that retirement plans can be considered marital property. It does not matter whether the retirement is through the spouse's employment or if only one spouse's name is on the 401k or IRA accounts. Often spouses overlook this important fact and for an older spouse, that could deny him, or her, the ability to retire.

Dividing retirement plans can be tricky as most have strict rules regarding early withdrawals or transfers according to Fox Business. For example, if a couple is dividing the contents of an IRA account, then the easiest way to do so would be to create a new IRA account for the other spouse and transfer the amount to that new account. If a spouse has a pension plan, there will be a question of changing the beneficiary to prevent a former spouse from claiming those benefits.

Adjustment on retirement plans

Many older couples are able to work together and want the other spouse to have an equal share. However, retirement plans will now have to support two lifestyles and this means that spouses will likely have to make some adjustments. These adjustments include:

  • Selling the family home to buy two smaller homes
  • Agreeing not to give money to help the children
  • Cutting down travel plans
  • Eating out less often
  • Cutting out unnecessary expenses

Spouses may also want to think about putting off retirement for a little while in order to rebuild their retirement plans so that they can have the type of retirement they want or have the means to take care of any longtime medical care or unexpected health issues. Speaking with an experienced attorney can help spouses understand what they will need for their financial future as they plan for life as a single adult.