Grey divorce is the phenomenon of increasing divorces among those persons over 50 years old: Baby Boomers. Grey divorce presents complex issues not experienced by younger individuals. Many lawyers are not familiar with the complexities of grey divorce cases and therefore self-education for clients experiencing this situation is important. For this reason, I wrote the book on grey divorce, How to Survive Grey Divorce. What You Need To Know About Divorce After 50, which is intended for use as an educational tool by Baby Boomers facing divorce. While there are many issues to be considered, and every case is unique, here are three questions to ask a divorce attorney if you are a Boomer going through your own grey divorce.
What happens to my health insurance upon divorce? Once the divorce is finalized you are no longer legally a dependent and therefore cannot legally remain on your former spouse’s health insurance or benefits. The ability to obtain new coverage and the cost to do so must be considered as part of the financial issues in the divorce. If you cannot obtain new individual insurance (as opposed to a group policy), then you must explore such alternative solutions as: agreeing to a legal separation instead of a divorce (thereby maintaining marital and dependent status); obtaining employment where a group plan is offered; or pursuing COBRA and other subsidized options.
Will I have to work longer than I planned? For many people over the age of 50, retirement planning is in process and maybe even right on target until the time a divorce occurs. The money you saved as a couple will now have to support two separate households, often as income is decreasing. It is critical to consult with a financial advisor to re-evaluate the retirement financial plan for each person individually in light of the division of assets and the payment or receipt of spousal support. It may be that the working spouse must continue to work to meet the family’s needs; and, the non-working spouse may face rep-entry to the workforce for the same reasons.
How are Social Security Benefits divided? Social Security benefits are derived from payroll taxes collected by the federal government (these taxes are recognizable on paycheck stubs as FICA, or “Federal Insurance Contributions Act”). They are paid to eligible individuals based upon contributions that they, their spouses or their ex-spouses make into the Social Security system. Primary Social Security benefits belong to the working spouse (i.e., the spouse who paid into Social Security). Social Security benefits are not divided in a divorce. This means the breadwinning spouse will have the right to a Social Security benefit based on contributions made to the Social Security System while working. Luckily, the Social Security system does not exclude the non-breadwinning spouse, who did not work or earned less than the breadwinner, from receiving benefits, if certain criteria are satisfied. If the non-breadwinner was married for 10 years or longer to a working/breadwinning spouse, he or she may be entitled to receive derivative Social Security benefits after divorce. This benefit is based upon the working/breadwinning spouse’s contributions into the Social Security system. These derivative benefits do not affect the amount of benefits the working/breadwinning spouse receives. For the non-breadwinning spouse to be eligible, the basic requirements in addition to divorce from the working/breadwinning spouse are set forth on the Social Security Administration’s website.
Next week, I will provide more questions to ask your lawyer if you are a Boomer going through divorce.