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Can someone still retire after a gray divorce?

When couples remain married for years, their financial circumstances become intertwined. They may commingle all of their property and may share ownership of most, if not all of their major assets. Sharing income and resources with one another may allow them to enjoy a higher overall standard of living.

They may also find it easier to prepare for major changes in life, like retirement, with two people working toward the same goal. Being able to share expenses and resources can make retirement more affordable. That being said, quite a few older adults every year choose to pursue gray divorces.

A gray divorce involves couples in their 50s or beyond divorcing after decades of marriage. Is it still possible to retire after retiring later in life?

Proper planning can minimize setbacks

Divorce generally necessitates the division of marital property. Spouses who don’t have a pre-existing agreement on how to do so must reach arrangements during the divorce process or litigate. People may find it very difficult to separate their finances and agree on property division terms after such a lengthy marriage.

In general, retirement resources including pensions and savings accounts are marital property or partially marital property. Contributions to pension plans and retirement accounts during the marriage are subject to division even if retirement planning began prior to marriage and only one spouse contributed to a particular account.

The division of retirement funds combined with the cost of maintaining two households instead of one can require a reevaluation as someone prepares for a gray divorce and retired life afterward. People may need to accept a somewhat reduced standard of living in some cases or may need to work a few extra years before they retire.

Making adjustments to plans, including reducing travel plans or changing housing arrangements, could allow someone to retire on time with the resources they have available to them. Tapping into available benefits can also help. Both spouses may still be eligible for Social Security retirement benefits. In fact, dependent or lower-earning spouses could claim benefits based on the other spouse’s income without impacting what benefits the higher-earning spouse receives.

The potential cost of a litigated divorce and the uncertainty of the property division decree established by a judge could both incentivize those preparing for gray divorce to pursue a more amicable approach to the process. Carefully preparing can take much of the risk out of a gray divorce.