In a divorce after age 60, you need to consider issues such as the family home and alimony from a different perspective than someone who's getting a divorce at a younger age.
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Couples divorce later in life for the same reasons younger couples split up—infidelity, financial pressures, regrets about earlier decisions, or a desire for greater independence. But when you're divorcing after age 60, these reasons are framed by aging and the realization that you have more years behind you than ahead of you. Older couples face unique issues that can factor into the decision to divorce—including health concerns, tensions brought on by planning for (or being in) retirement, losing parents and friends, and even the unsettling loss of youth.
While there are differences in the emotional impact of divorce for couples who end their marriage later in life, the biggest difference is that there is less time to recover financially, and this reality colors many of the issues that are unique to late-life divorce. If you're filing for divorce later in life (or are just considering it), here's a look at some of the challenges you might face.
Dividing Assets in a Late-Life Divorce
Part of the divorce process will be dividing assets with your spouse. The market value of an asset isn't always the only consideration when you're making these decisions, because some assets will be more useful to you later in life than others. Let's look at several types of assets.
Dividing Your House in a Late-Life Divorce
Keeping your house provides you with future benefits that might be more important the older you are because of the following factors.
- In many states, age triggers eligibility for real estate property tax exemptions and waivers.
- You are eligible for a reverse mortgage beginning at age 62. A reverse mortgage offers a potential stream of income.
- Primary residences receive special treatment for people qualifying for public benefits (for example, Medicaid).
- Tax deductions for homeowners (such as deductions for mortgage interest and property tax) and exclusions from gains upon sale can be important in later years.
- Owning a house means you have potential rental income.
- Keeping the house might allow you to draw on any home equity.
With these considerations in mind, as well as the emotional impact of potentially losing the residence in which you raised your family, the stakes involved in negotiating the division of the family home are even higher than they might be in a younger divorce.
Dividing Retirement Benefits in a Late-Life Divorce
Dividing retirement savings in a divorce can be complicated. You might need a separate court order, usually called a "Qualified Domestic Relations Order" (QDRO), to cover the division of retirement benefits. Before making any decisions about retirement, get a copy of the Summary Plan Description from the retirement plan administrator.
Because of the complexity of QDROs and retirement benefits, it's a good idea to consult with a lawyer to discuss:
- when you can receive distributions and still avoid tax penalties
- whether you can get survivor benefits if your spouse dies, even after the divorce
- whether your spouse has taken any loans against a 401(k) plan that should be repaid before the funds are divided
- whether you're entitled to any contributions made to retirement plans after the divorce
- whether you can get a hardship withdrawal if you need one, and
- if you are a civilian spouse with military retirement benefits in your divorce, whether your rights are protected under the military's Survivor Benefit Plan.
Dividing Social Security Benefits in a Late-Life Divorce
Divorce courts can't divide Social Security benefits, but the rules about benefits are relevant to your post-divorce income.
You can collect retirement benefits on your former spouse's Social Security record, without reducing your former spouse's benefits, when:
- your marriage lasted at least 10 years
- your ex is unmarried
- your ex is 62 or older
- the benefit your ex is entitled to receive based on their own work is less than the benefit they'd receive based on your work, and
- you are entitled to Social Security retirement or disability benefits.
What Happens to Your Social Security Benefits When Your Ex Dies
If your former spouse dies, you might be eligible to receive survivor benefits from your former spouse's Social Security benefit. You must meet certain eligibility requirements, such as having been married to your ex for at least 10 years and not being remarried (unless you remarried after age 60).
You can find the latest information on the Social Security Administration's divorce and benefits website. When you're considering divorce, it's a good idea to obtain a current Statement of Earnings for yourself and your spouse.
Financial Planning for a Late-Life Divorce
Most of us plan to coast in our later years. If you suddenly find yourself getting divorced, you might also find you'll have to live on less than you anticipated. You might even be forced to re-enter the workplace or work longer than expected. These are reasons why financial planning becomes crucial in late-life divorces. In particular, it makes sense to:
- Calculate living expenses. Having an accurate post-divorce budget will help you assess your income needs and figure out which assets best meet those needs.
- Aim for a mixed portfolio. Having diversified investments can help you weather financial storms: Your home and retirement benefits might be the extent of your marital estate, but remaining flexible about how they are divided is important as you plan for retirement (or live out your retirement).
- Learn about tax consequences. When younger couples divorce, tax implications of future retirement plan distributions are often ignored when valuing retirement assets, because it's mere speculation. In a late-life divorce, however, reducing an asset's value in the property division to account for likely tax consequences is appropriate.
- Understand the time value of money. Alimony, property buyouts, and other methods of delayed payment require an understanding of how the value of money changes over time. Calculations for present value, future value, and the effects of inflation are important financial planning tools.
- Generate income. You'll need to figure out how to keep money flowing in. You should also evaluate assets for potential passive income, like rent, dividends, and income from businesses not requiring your direct involvement.
Dealing With Health Concerns in a Late-Life Divorce
Serious health conditions can influence how a marital estate is divided and whether one spouse needs alimony, especially if that spouse isn't able to earn income and doesn't have sufficient assets to live on. And a spouse with serious cognitive impairments (for example, Alzheimer's or other dementia) might need a court-appointed guardian or guardian ad litem (a representative appointed by the divorce judge) to provide surrogate decision making.
The cost and availability of health care are major concerns for those over age 50 who are trying to bridge the gap to Medicare eligibility.
Estate Planning in a Late-Life Divorce
During and after your divorce, it's important to evaluate the beneficiaries you've designated in wills or retirement plans, as well as agent designations in medical directives or powers of attorney, to be sure your documents reflect your wishes. Estate planning can be an integral part of your divorce settlement in a number of ways.
- You might want to negotiate to receive or provide death benefits from life insurance, a retirement plan, a will, or a trust.
- A will or life insurance policy can provide security for debts, alimony, and property buyouts.
- Your divorce settlement can establish trusts to provide for agreed-upon responsibilities such as grandchildren's education or financial support for adult children.
Other Special Issues in a Late-Life Divorce
A few other issues unique to late-life divorces are worth noting.
Consider Your Adult Children
Even though they're grown up, adult children don't escape the emotional impact of their parents' divorce—especially when they're still financially dependent. In turn, adult children can affect their parents' divorce (for better or worse) by taking on a variety of roles ranging from "Confidante" to "Fixer."
Consider Whether Separation Might Be Better than Divorce
Another unique late-life divorce question is whether to resolve financial issues by separating and entering into a postmarital agreement, rather than via a full-fledged legal divorce.
Sometimes, getting a legal separation, but maintaining a legal marriage, might allow spouses to:
- in some circumstances, become eligible for Medicare based on one spouse's work history
- bring a military marriage to the 10-year or 20-year point that entitles the civilian spouse to receive certain benefits
- meet the 10-year eligibility when a "former spouse" is eligible for Social Security benefits
- defuse financial inequities, or
- avoid religious or moral objections to divorce.
Learn More About Late-Life Divorce
You can find in-depth information on all key issues related to late-life divorce in Nolo's Divorce After 50: Your Guide to the Unique Legal and Financial Challenges, by Janice Green.