Divorce statistics for the most recent decade have upended what people believe about modern divorces. Although Millennials seem to get married at lower rates than the generations before them, they also have a lower divorce rate. On the other hand, older adults seem to be filing for more divorces than they did in the past, which can have a considerable impact on their finacial stability and plans for retirement.
The rise in gray divorce brings with it unique considerations for those getting close to retirement age. Whether you have already divorced and find yourself worrying about your spousal support or child support obligations after you move to a fixed income or you want to divorce but worry about the impact on your retirement, educating yourself about your rights can help you make better decisions.
The official age for full retirement keeps going up
When people talk about the retirement age, the official age they often refer to is one set by the government. The Social Security Administration only allows people to claim full retirement benefits after they reach the age of 62. However, that age is currently going up by two months every year until it reaches 67 years of age.
For those who retired in 2019 or plan to retire in 2020, the actual age of retirement is now 66 and six months. Although that does theoretically mean you will have to work longer to claim your full Social Security benefits, it could benefit you if you want to file for a gray divorce in the near future.
Continuing to add funds to your retirement plan and to earn taxed income for a few extra years could offset the amount that you lose when you split assets with your spouse in the divorce. You may want to work a few extra years before you claim your Social Security or even plan to work part-time after you retire to offset the lost retirement funds. In most New Jersey divorces, you will split your retirement and pension, even if only one spouse ever contributed to them.
Once you retire, you may qualify for a modification
If you have already divorced and pay either spousal support or child support, your obligations to pay may go down after you retire. The courts determine the amount you pay based on your income, the income of your ex and a number of other factors.
When your income goes down, so does your support obligation. You can request a modification from the courts that will result in an official reduction of the amount of support ordered. A modification will adjust what you have to pay and make it easier for you to survive on the fixed income common during retirement.