A gray divorce, or a divorce that occurs at the age of 50 or older, may make you nervous or frustrated because of the implications it has for you financially. You have a strong retirement portfolio now and are expecting to get a good amount of Social Security income when you retire, but if your spouse takes a portion of the savings, your retirement could be delayed or prevented completely.
It is true that a gray divorce can hurt your retirement. Dividing retirement plans could minimize their ability to collect more money and compound with interest. You may also suddenly have to save more than you were planning to, making it more difficult to live now if you want to have the same kind of retirement in the future.
Gray divorces are becoming more common, and retirement is an issue
Gray divorces are more common today than in the past. In 2018, it was reported that among those 50 and older in the United States, the divorce rate had already doubled. While you won’t have to worry about issues like child custody or support in most cases, retirement is a big issue to be concerned with.
You have 401(k) plans, individual retirement accounts, stocks, bonds, savings and other financial support that you need to think about. You can use a Qualified Domestic Relations Order to divide a retirement account without penalties now, but that doesn’t necessarily mean that you won’t be negatively impacted by having to split the retirement.
There are options to help your retirement continue to grow after your divorce
There are options you could consider that won’t necessarily require you to give up your retirement. You might decide to keep all the money in the accounts until you and your ex-spouse reach retirement, dividing them at that time with the benefit of additional compounded interest. You might give your spouse liquid assets now in exchange for leaving your retirement account alone.
These and other options may be open to you, so you can protect your best interests and the retirement that you planned to have in the future.