Divorce is a significant life-changing moment, and happing of it near to your retirement period. The stakes for the other partner are maximum. After years of raising children, managing the household, and living together. Many couples find it difficult to live the golden years of life with each other and decide to split.
Divorces may also affect your savings and other retirement benefits that you acquired during the marriage. And with years of relationship split in a second, given an emotional and financial impact on you and your spouse.
These conditions lead to a serious concern: Is it better to divorce before or after retirement? Breaking down the complexities associated with this question, we are going to understand this confusion.
How The Timing of Divorce Matters – Is It Better To Divorce Before Or After Retirement?
The division of retirement benefits and accounts is not affected by the length of marriage, but only the amount of assets acquired during marriage is going to be divided between the spouses.
At the time of retirement or a long-time marital relationship can lead the other unemployed spouse to get maximum possible retirement benefits and other benefits like pension, 401(k), etc.
Hence, we can say that the longer a marriage goes, the higher your stake becomes. So, most couples continue a long marital relationship and get divorced at the time of retirement; this practice is known as Grey Divorce.
-
Grey Divorce
Grey divorce refers to the divorce between spouses of the age group of more than 50 years. According to a study from Bowling Green State University, the divorce rate for Americans aged 50 and older has doubled since the 1990s, and one in four divorces now involves people in this age group.
Usually, retirement is considered as golden years of life when you are free to enjoy and live your life with accordance to you. In this phase, a divorce can be a difficult part of your life, so the question is genuine: Is it better to divorce before or after retirement?
Factors Affected By Divorce
Divorce can affect many aspects of both spouses’ lives. From financial difficulties to asset division, it ruins every part of your current situation.
Some factors are directly affected by divorce before and after retirement :-
Financial Disbalance
- Divorce Before Retirement : If both spouses are working, then the total household income is maximum and sufficient for expenses and savings. Also, if you divorce before retirement, you will get some time to again make savings and separate assets.
- Divorce After Retirement : After retirement, you will get less income as a pension compared to the salary you were getting before retirement. So, after the division, the income becomes even less than before.
The reason for the concern that “Is It Better to Divorce Before or After Retirement” is that divorce before and after retirement has both pros and cons, like if only one spouse is working, so the other will get equal retirement benefits as alimony. making a fair division, the court handles these cases through a QDRO order.
Pension And Retirement
- Before Retirement : When the pension and retirement accounts are not in use, it becomes easy to divide them without excessive paperwork, only with the help of a Qualified Domestic Relations Order (QDRO) used by courts. Also, you can settle the division on your terms.
- After Retirement : Here, retirement accounts are in use, so the division of benefits becomes complicated, and there is less scope for altering the agreements on your terms. Always take an expert legal advisor’s advice in such cases.
Healthcare And Insurance
- Before Retirement : If you divorce before the retirement of your partner, then you will lose the coverage of your spouse’s employee-sponsored healthcare. There are some plans, like COBRA, that give healthcare coverage till 36 months after the divorce, but it is expensive to buy.
- After Retirement : If both spouses are on Medicare, then divorce does not affect the plan that much, but plans like supplemental insurance plans get affected by a divorce, and you must now think about your future expenses.
Impact of The Timing of Divorce On Your Retirement Accounts
If you are an employee, then retirement accounts and benefits are connected to you. So, the accounts may be affected based on before and after retirement divorce which are :-
- Retirement Accounts : Accounts like 401(k) and IRA can only have one account holder, but the amount saved in this account during marriage belongs to both spouses. With the help of a QDRO, the division was done between both spouses, including pension benefits.
Also, these are the savings accounts, so the longer the marriage goes, the higher the stack becomes for both spouses. - Social Security Benefits : This benefits plan requires us to be married for at least 10 years, and after that, the other spouse will be equally entitled to the social security benefits of the working spouse.
Final Thought Over Is It Better To Divorce Before Or After Retirement
So, the timing of divorce has both pros and cons. Also, the length of marriage may not affect the unemployed spouse’s share of the working spouse’s benefits plan. But it can affect the amount of division because the longer the marriage goes, the higher the acquired asset becomes. A long-term marital relationship comes with many complexities, like adult children, a stable livelihood. So, before taking any decision, think twice and consult an expert legal advisor.
Thank you for reading our article. We hope this is helpful to you, and your concern is clear now. As for more improvements, making our content accurate and simple, we would love to hear your feedback on this article. Your thoughts on this article not only help us to improve but also help future reader to get more precise content to solve their queries.
