While the divorce rate for most groups in the United States is declining, or at least leveling off, the divorce rate for those over the age of 50 has more than doubled over the past 25 years.
A number of factors seem to be driving this trend of divorce later in life. Whatever the rationale behind the divorce, it carries with it significant financial implications. One of the biggest challenges involved in a gray divorce is division of assets because the couple has had so much time to accumulate joint property. There are also issues that may arise related to retirement savings and alimony.
- The family house
It may be tempting to keep the family home for sentimental reasons. However, a couple must also think about monetary matters regarding utilities, maintenance, taxes, insurance, etc. It may be more practical to sell the home and split the proceeds.
The longer the marriage lasted, the longer one can expect to pay or receive alimony. It is common for a court to award alimony for life following a long-term marriage. Keep in mind that it is the length of the marriage, not the age of the couple, that goes to determine the duration of alimony. In other words, the court may not grant lifelong alimony after a second marriage that is relatively short.
- Retirement savings
Regardless of whether it is an at-fault divorce or a no-fault divorce, the norm is to divide retirement money 50-50.
Financially speaking, there is often more at stake in a second marriage than a first: more assets, grown children and other issues. Statistically, a remarriage is even more likely to end in divorce, perhaps because the higher stakes put more pressure on the couple. Therefore, it is prudent to think about a prenuptial agreement to protect one’s interest in the event of a second divorce.