Most couples plan to live together in retirement, splitting the income and expenses of one life. Gray divorce, or late-in-life divorce, has an enormous impact on retirement, increasing each spouse’s cost of living while significantly draining their savings and assets. If you’re divorcing after 50, you’ll need to get the best divorce settlement possible to ensure you don't struggle in your golden years.

Gray Divorce Can Have a Devastating Effect on Retirement

Retirement Plan and Pension Folders on a DeskDivorce doesn’t just create a division of wealth; it doubles everyday living costs. For example, visiting your children and grandchildren now means two cars, two car insurance policies, and double the gas price. Living separately can increase spouses’ expenses by up to 40 percent—and this is before your savings and credit are negatively impacted by divorce.

In addition to tightening their budgets, spouses may also be forced to:

  • Downsize. Divorce can turn one large house into two smaller homes, force each spouse to move into an apartment, or require a parent to move in with one of their adult children.
  • Reduce their disposable income. People who no longer share expenses in retirement may be forced to spend their savings on food and utilities instead of dream cars or travel.
  • Work longer. Spouses in “boomer” divorces may need to put off retirement for several years due to the financial constraints of separation. Spouses with considerable assets may need to work one or two additional years to build up their retirement savings, but those without significant assets may still be working into their 70s.
  • Take minimum wage jobs. Late divorces can be devastating for homemakers and stay-at-home moms who have been out of the labor market for decades. They may only be able to find part-time work, perform minimum wage jobs, or have problems finding employment at all.
  • Unravel the family accounts. If one spouse handles the finances, the other spouse may need an accountant and a divorce lawyer. A good divorce lawyer can find accounting anomalies, identify creditors, determine if your spouse is attempting to hide assets, and help you plan a post-divorce budget.

How to Protect Your Financial Security for Years After Your Divorce

Your retirement funds—both savings and dedicated retirement accounts—are likely considered marital property and eligible for division in divorce. This is true even if only one spouse’s name is on the account or only one spouse has contributed to the fund. There are many ways to split your 401K and retirement accounts, and our legal team can determine the way that offers the most benefit to you.

The method you use to divide retirement funds could affect:

  • Your living situation. It’s possible to divide your retirement funds by releasing your rights to an account for another asset of similar value (known as equalization). For instance, if you want to keep the family home, you could give up your right to one or more accounts that add up to the home’s appraisal value.
  • Your heir’s inheritances. After taking sole possession of any account, you should adjust your beneficiary designations as soon as possible. If your ex-spouse is still listed as the beneficiary, they will legally inherit the balance upon your death. Remember that you will no longer have control over the beneficiaries of your ex-spouse's retirement accounts after divorce, which could affect your shared children’s or step-children’s inheritances.
  • Tax liability. Liquidating your retirement assets may give you cash-in-hand, but you can also have a high tax penalty. For example, withdrawals from a regular IRA are taxable, but withdrawals from a Roth IRA are not. It may be better to let the accounts continue to vest rather than withdraw the funds early.
  • Future value. If you plan to equalize pensions, you should consider the future value rather than the face value of these payment streams.

Let Us Advise You on Late-in-Life Divorce in Washington

Divorce is not only emotionally challenging; it can also put spouses in danger of dire financial straits that can have a permanent impact on their lives. At the Law Offices of Molly B. Kenny, we work to identify all assets and ensure a division of property that will sustain you for the rest of your life. Call our offices today at (425) 460-0550 to arrange a private consultation, or use our online contact form to have us get back to you.


Molly B. Kenny
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Divorce and Child Custody Attorney Serving Bellevue and Seattle Washington