A divorce can have a major impact on your financial future. This is especially true with gray divorce, which is the term used to describe divorce in your 50s or 60s. People in this age bracket are often getting closer to retirement, so divorce may raise questions about how they’re going to retire in the future.
For example, say that you have been earning a pension plan for the last 30 years, as a benefit of your employment. You and your spouse were going to simply use the pension to retire together. But now your spouse has filed for divorce. Do you get to keep your entire pension or do you have to share it with your ex? What does the divorce mean for retirement for both of you?
Your spouse may have a claim
It’s important to note that your spouse may actually be able to claim some of your pension plan benefits in a divorce.
Typically, assets that are earned during a marriage are subject to property division. You have to split your wages with your ex during divorce, for example, even though you earned the money. The same goes for a pension, which is simply a financial benefit earned during employment. You may need to divide the portion of that pension that you earned during your marriage with your ex.
To do this, you use a qualified domestic relations order (QDRO). This is a court order specifying the percentages that will go to each of you. For instance, you may get 75% of future pension payments, while the remaining 25% goes to your ex.
Financial complexities
Every case is unique. If you’re getting divorced and encountering these types of financial questions, be sure that you know exactly what legal options you have.
