In North Carolina and across the US, the divorce rate for older individuals has been steadily increasing. In fact, a Pew Research study found that gray divorce, or divorce among couples ages 50 and older, has increased by 109 percent over the past 25 years. Meanwhile, the divorce rate for couples between the ages of 25 and 39 has dropped by 21 percent over the same period of time.
Researchers have several theories for why gray divorce is trending upward, including boredom, empty-nest syndrome and the financial independence of women. However, whatever the reasons, divorce among older couples can present several age-specific challenges, especially when it comes to finances and retirement. For one thing, the future earning potential of one or both partners is more limited than that of people who divorce in their 20s, 30s or 40s. Meanwhile, the state in which the couple resides could have a major impact on the way the marital assets, including the marital home, are divided.
Taxes will also impact the way the home and other assets are allocated. For example, 401(k) accounts lose value as soon as withdrawals are made. This is because each withdrawal is taxed, and early withdrawals carry penalties. If a couple had planned to leave the account untouched until they reached 65, dividing the asset early due to divorce could significantly reduce the total amount available, which could negatively impact retirement plans. In addition, the costs of maintaining two separate homes could force one or both spouses to dip into their retirement savings just to survive.
Individuals who are going through a gray divorce may benefit from contacting a family law attorney for help. A lawyer could review the situation and provide essential guidance throughout the divorce process. Legal counsel could also negotiate agreements on asset division, alimony and other important divorce legal issues.