A comfortable retirement typically requires many years of careful planning. Married couples may have worked with a financial advisor years ago to maintain a sustainable family budget and begin saving what is necessary to allow them to live comfortably in their golden years.
When older couples who have shared resources and financial obligations for decades choose to divorce, the impact of ending the marriage can be serious. In some cases, older couples may question whether they are still able to retire after a divorce.
Retirement savings and pensions are often divisible
In some cases, only one spouse worked a job where they accrued a pension or saved for retirement. In such scenarios, the other spouse might assume that they have no resources for financial stability in their golden years.
Thankfully, the name on the account is typically not the determining factor when deciding if a retirement account or pension is divisible during a divorce. When spouses made contributions or earned pension benefits determines whether the resources are marital, and therefore eligible for equitable distribution, or separate.
Spouses can typically split retirement savings even before reaching retirement age without penalties and taxes if they use the right paperwork. While each spouse may only receive a portion of the overall savings, they may be able to retire if they adjust their plans to better control their costs.
Dependent spouses can qualify for benefits
Retirement savings and pensions aren’t the only resources that people rely on during retirement. Most older adults also require Medicare insurance to pay for their medical expenses. They may also rely on Social Security retirement benefits to supplement their retirement savings.
Both Medicare and Social Security retirement benefits are frequently available to non-working, lower-earning or otherwise dependent spouses. Provided that the marriage lasted at least 10 years, they may qualify for Social Security retirement benefits and Medicare benefits based on their spouse’s work history. Their claim to benefits does not prevent their working spouse from obtaining the benefits they earned or diminish the benefits they receive.
Those preparing for gray divorces have complex marital estates and may need to proceed with caution to preserve as much of their resources as possible for their financial stability after retirement. Sitting down to talk about the reality of divorce later in life can help spouses protect themselves.
