Gray Divorce Can Leave You Seeing Red
You know a sea change is happening when the number of people within a certain age bracket who are divorcing soars so high that the trend earns its own sobriquet.
Such is the case with “gray divorce,” which we’ve written about several times on this blog. As the phenomenon continues (the divorce rate among people ages 50 and older doubled from 1990 to 2010), its effects are revealed in other areas.
The most recent revelation is that the financial situation can change drastically. Gray divorces frequently result in splitting retirement savings in half, Craig Ferrantino, president of Craig James Financial Services in New York, recently told The Washington Post.
Retirement savings include pensions, IRAs and 401Ks.
The problem is that older couples who divorce and split their retirement savings often must change their lifestyle expectations. That nest egg that would have comfortably accommodated the plans of a couple during retirement often doesn’t stretch far enough to support two separate individuals post-divorce.
“Sometimes it is difficult to find a solution that makes both parties happy in these situations,” says Encinitas divorce attorney John Griffith. “At this age, it’s often too late to generate the income necessary to accommodate both people at the same level as they had planned when they were married.”
Although it’s unfortunate that those who are part of the gray divorce phenomenon can’t be helped in every situation, Griffith said he hopes younger generations are watching this trend and taking note.
“It would be great if this trend sparks conversations among younger couples to be more diligent about their retirement savings,” Griffith says.
Griffith doesn’t advocate for divorce, but “most couples don’t enter a marriage intent on divorcing down the road, either,” he says. “All couples should hope for the best, yet be prepared for an ending that doesn’t result in ‘happily ever after.’”
Consider saving for retirement in a manner that should the marriage end in divorce, it won’t leave either spouse in the red.
Couples planning to marry might also consider a prenuptial agreement. In California, the court takes the approach that all earnings, property accumulated from those earnings (including retirement) and asset appreciation during a marriage are to be evenly divided in the event of a divorce. If you and your future spouse wish to keep your individual accumulations from being divided by the court, you can do so in a prenuptial agreement.
A prenuptial agreement also can help protect both spouses from each other’s debts, and it can limit or forfeit the right to alimony.
If you’re in the gray divorce category and you need some legal guidance on how to navigate the process as painlessly as possible, please call our office for a complimentary consultation.