When younger couples get divorced, their primary concerns typically include things such as the custody arrangement and whether either partner will be able to keep the house. However, with a gray divorce, things are not always that straightforward.
While custody arrangements may not be relevant for people who divorce when they are over 50, there are other things to consider, including a shorter career horizon, retirement savings and a more complicated asset distribution.
Consider a spouse who has been out of the workforce for many years while raising children. Finding work at a more advanced age is difficult, and starting a new career even more so. The working spouse, on the other hand, could face supporting two households while approaching retirement age.
Although splitting a retirement account down the middle may be equitable, the fact that there are now two households to pay for severely diminishes the value of each half. To make matters worse, with only 15 or 20 years until retirement, it is not easy to make up the difference.
Significant assets to distribute
Though certainly not insurmountable, the distribution of assets in a gray divorce can be a complex process. There may be multiple properties, investments and an estate plan to work through, in addition to retirement funds.
A gray divorce is easier in some respects because, by the age of 50, the couple’s children are often grown, eliminating the custody issues. However, the financial side of divorce becomes more onerous as couples age, because fully recouping losses is much less likely the closer they are to retirement.