Virtual Consultations Available

5600 Tennyson Parkway
Suite 385
Plano, TX 75024

Call Us Today

Compassion Commitment Experience
Photo of attorneys Waren Price and Eren Price

What to know about retirement resources in a gray divorce

On Behalf of | Jun 3, 2024 | Divorce

With people living longer than ever and enjoying higher standards of living, retirement is much more expensive than it once was. People need to save for years to afford retirement. Even then, they may be dependent on certain benefits programs.

Many adults can only truly afford retirement because they share household expenses with a spouse and combine their savings and other resources. In recent years, divorce rates have declined overall, but they have increased substantially for older adults in particular. People past the age of 55 who have stayed married for years are much more likely now than they were in years before to file for divorce.

What happens to retirement resources during a Texas divorce?

Pensions and retirement savings

The biggest resources that allow people to retire are usually retirement savings accounts or employer-sponsored pension benefits. Whether someone has decades of military service or a well-funded Roth IRA, pensions and retirement savings can help ensure that people have the resources they need for their comfort during retirement.

People often worry about whether they can afford to retire if the pension is in the name of their spouse. Those who saved money may worry about sharing that with a spouse. Typically, savings and pension benefits accrued during the marriage are subject to division.

Any contributions made prior to marriage are the separate property of the spouse who holds the account or job. With proper planning, it is often possible to divide retirement savings without penalties or major tax consequences.

Medicare and Social Security benefits

Retired adults rely on government benefits for certain needs. Medicare coverage can help pay for basic medical expenses after people retire. Social Security retirement benefits can help supplement retirement savings to ensure that people have enough money every month to meet all of their basic expenses.

Provided that the marriage lasted for 10 years or longer, a dependent spouse can qualify for Medicare based on their spouse’s earnings. It is also possible for a spouse who didn’t work or who earned less to qualify for Social Security retirement benefits based on what their spouse made if the marriage lasted for at least 10 years. Such claims do not diminish the benefits available to the higher-earning spouse.

Those contemplating gray divorce often need to proceed with caution to protect their finances during their golden years. Learning more about community property rules and what they mean for retirement resources can help those considering divorce later in life to make truly informed decisions.