The Complications of Dividing Retirement Funds in “Gray Divorces”

“Gray divorce” is a term that has been adopted to describe the uptick in divorce among people over age 50 in the past 20 years. The National Center for Marriage & Family Research (NCMFR)  conducted a study titled Age Variation in the Divorce Rate, 1990-2012. This report reveals that while the overall divorce rate in the United States has remained essentially unchanged in 20 years, that apparent stability belies a considerable variation by age group. For example, the divorce rate for those above age 50 has doubled since 1990, suggesting that the risk of divorce declined among younger adults.

The NCMFR has found that for those age 55-64, the divorce rate has doubled, and for those age 65 and older, the rate has tripled. One of the contributing factor to the phenomena of an increasing divorce rate for older people might be a function of people living longer and wanting more out of their lives in their more vital, advanced years. Unfortunately, that freedom and the new lease on life comes at a tremendous cost regardless of the couple’s ages.

Divorce is a big threat to your retirement savings

When a couple is at or getting close to retirement age, dividing retirement plans and other assets can become complicated. After several decades of working, saving and investing, the stakes are high and there is a lot to lose. In Tennessee, the court will divide marital assets according to the equitable distribution model, which means that each party will receive roughly equal amounts while not being a complete 50/50 split down the middle. Therefore, you must do some careful planning for your financial future. When once your plan was to spend the rest of your life with your spouse, now you must figure out how you will make your life work on just your income and then on your portion of the retirement savings. The closer you are to leaving your full-time job to retire, the more challenging it can become.

You might choose to work with a financial planner who can give you an objective picture of your financial position, and advise you about the financial decisions you are going to have to make in the divorce negotiations.

Dividing retirement benefits

If one (or both) of the parties had already accrued savings in a retirement account prior to the date of the marriage, that portion can be deleted from the balance and the remaining balance will be divided along with the other marital assets.

As you contemplate a later-in-life divorce, you will have many questions about what your life might look like post-divorce:

• Will you have to keep working beyond your original retirement date?
• Where do you plan to live?
• Can you afford to keep your home?
• Do you qualify for spousal support?
• Will you be required to pay spousal or child support?

It might be helpful to think about your divorce from the perspective of dissolving a business partnership and set aside the emotions that can cloud your judgement. Yes, you will certainly experience a range of emotion when it comes time to separate from someone you thought that you would spend the rest of your life with, but do whatever you can to not allow your emotions to influence your decisions.

After having given decades to one another in marriage, divorces late in life can be especially devastating, or they can be liberating. Either way, there can be complications when it comes to dividing retirement funds and other assets. We are here to guide you through that process and help you prepare for your new life after divorce. You are welcome to contact an experienced Knoxville divorce lawyer to schedule a case review right away. Call LaFevor & Slaughter at 865-637-6258, or complete our contact form to learn more about how we can help.