Gray divorce refers to a couple in their 50s or older deciding to end their marriage. It is a growing trend in the United States. According to Advisor Magazine, frequent reasons given for it include a lack of personal fulfillment combined with longer life expectancies.
Regardless of the reasons behind it, gray divorce carries with it financial challenges. Here are some questions that couples considering it should ask themselves.
How will they cover health care expenses?
Couples who divorce after age 65 do not have to worry as much about health care affordability following divorce because they are eligible for Medicare. However, people who have not yet reached retirement age may have a problem, especially if they have coverage from their spouses’ employment. It may be possible to continue coverage under COBRA for up to three years. Other options include coverage from one’s own employer or purchasing a policy through the Health Insurance Marketplace, which is possible under the Affordable Care Act.
How will divorce affect retirement plans?
Couples may have saved for retirement based on the assumption that they would be spending those years together. Now that retirement savings have to support two households, it may not be enough. According to WTOP News, the divorcing spouses may have to delay retirement to save more money or change what they planned to do during retirement. For example, it may no longer be possible to travel in retirement if that was the original plan. Individuals still wishing to travel following divorce may have to find other ways to pay for it or resign themselves to not traveling as far or staying as long.
Another issue that arises during gray divorce is trying to split joint assets that are not liquid.