Have you heard that gray divorce is on the rise? This means that Baby Boomers in particular are getting divorced at an elevated rate. But it applies to anyone who is over the age of 50. Younger age groups have falling divorce rates, but this singular age group has a rising rate.
This is very interesting to see, and it can have some unique impacts on how these cases play out. For example, what is it going to mean for retirement?
Planning to retire together
What often happens is that a couple plans to retire together, as a couple, not anticipating that they could break up. They consider their assets jointly. For instance, if someone’s spouse has a pension plan at work, that person probably assumes that they will also benefit from this pension plan when their spouse retires. This may be how they have decided to retire and make ends meet.
But if people who are near retirement age are getting divorced at a higher rate than any other age group in the country, this can cause some problems. It may mean that a couple gets divorced right before retirement, and this throws all of their financial plans into chaos.
Using a QDRO
One way to address this is to use a qualified domestic relations order (QDRO). This can be used to stipulate that the pension plan still has to be divided between both individuals, even though they are divorced and even if the pension pays out years after that divorce.
The thing to remember is that a pension plan or a retirement plan usually counts as a marital asset, just like paychecks or other forms of income. The business is essentially paying that person in the future. But they are earning those payments during the marriage, so they still have to divide the plan with their spouse if they get divorced.
What steps should you take?
This can get complicated, so be sure you know about what legal options you have. This is especially true if you believe your spouse is going to push back against this and attempt not to divide their pension plan.