A gray divorce might be in your best interests if you and your spouse don’t get along or no longer want to be together, but a later-in-life divorce could hurt your retirement plans. Why are your plans in trouble? The reality is that you are going to be less likely to recover economically because you have fewer years of work-life left after a gray divorce.
If you divorce at 60, you may only have six or seven years of work left before retirement. If you’re 70, you may not want to work again at all. This will make an impact your options when you divorce.
What should you know about a gray divorce and retirement?
There are a few things you can do to protect your retirement. To start with, you need to look closely at your assets and debts to determine what would be the fairest split. If you have no retirement, then you may need to look into retirement splitting with a QDRO or other paperwork to help you transfer those funds legally and without unnecessary taxation. If your spouse is in the military, there may be the 10/10/10 rule to consider, or you might need to file extra paperwork to qualify for a share of your spouse’s retirement income.
One of the most important things to consider is how many assets will be liquid assets versus assets that don’t have a specific value. For example, liquid assets like cash in your bank account, will be easier to invest and grow, even in your older age.
It may need to go without saying that divorcing in later life could mean that you have to cut back on your retirement goals a little bit, especially if you’re only getting a share of your spouse’s retirement or will need to subsidize the retirement income with part-time work. Still, it is possible to approach this split with the goal of getting as much as you can, so that your retirement is protected, even if you need to work a few years longer or negotiate for assets to sell off for liquid funds.