How to Survive a Gray Divorce in Retirement

If you’re facing a gray divorce in Washington state, especially in retirement, you might find yourself grappling with how to recalibrate your life, especially regarding your financial picture. Finances can be a source of intense stress for couples divorcing after age 50, as your spouse may have played a significant part in how you planned to carry this weight through the end of your lives. Now that it’s evident you’re going to enter or go through the remainder of your retirement solo, there are a few areas to consider that can help you make any necessary adjustments. 

Asset Division

Washington state is a community property state, meaning that anything acquired during marriage is owned by both parties equally, even if the asset is in the sole name of one of the spouses. There are exceptions, such as gifts, property owned prior to marriage, or identifiable inheritances received by one spouse during the marriage. The latter is known as separate property. 

Community property may encompass real estate, physical assets, income earned by the spouses, investment interest, capital gains, and retirement benefits (more about retirement below). It is important to note that debts are not exempt from being split in a Washington state gray divorce; debts that either spouse takes on during the marriage are, for the most part, considered community debts by the court. This means both spouses will generally be responsible for these debts unless a judge says otherwise.

Notwithstanding the above, knowing the difference between community and separate property is just the first step in understanding how a court divides a couple’s assets and debts. Washington courts examine each divorce individually and decide what they consider fair and reasonable. 

Fair here does not mean splitting everything down the middle. In Washington, the court is charged with dividing assets and debts “equitably.”  But equitably does not necessarily mean “equally.” When dividing assets and debts, Washington judges take into account the types and values of community property, the types and values of separate property, the length of the marriage, the spouses’ financial situation, and occasionally the parenting plan for couples with minor children.

A judge considers what separate property each spouse owns because if one spouse has significant separate assets, the other might get a larger share of the community property. Other circumstances matter, too, such as each spouse’s role during the marriage. If one spouse mainly cared for the children while the other earned more income or accumulated separate assets, the court will consider that when dividing property.

The Emotional Impact of Asset Division

Beyond the calculations, asset division can have life-changing and emotional implications in a gray divorce. Consider a couple who owns their home outright and expects to live there for the foreseeable future. Even unencumbered by a mortgage, they might be surprised to learn that they still don’t have the income necessary to support the upkeep of the house as a single individual. Due to their divorce, they may have to consider selling the home they love and downsizing or buying their spouse out using another asset, such as retirement savings, which can, in turn, affect their income.

In any event, uprooting oneself from the marital home can be financially challenging. Depending on local real estate prices, which in Seattle and its surrounding areas can be higher than the national average, current availability of alternatives, and existing market conditions, this could become a rabbit hole for older individuals. 

Retirement Savings

Many couples build their retirement plans around the idea of growing old together, using both incomes to save, invest, and, when the time comes, draw on. Divorce can disrupt that plan entirely.

When you’re married, sharing expenses makes it easier to save for retirement. Once you’re living apart, however, each person must take on their own set of costs, making it harder to put money away for the future. This is impactful if you are not yet of retirement age and have retirement savings goals you haven’t reached, or your divorce has changed your financial picture such that you can no longer save. 

As mentioned above, retirement accounts will usually be divided according to Washington state community property laws unless both sides agree on a different arrangement. But dividing one pension, IRA, or 401(k) often means, in straightforward terms, that there’s less to work with.

Seattle financial professionals often suggest aiming for retirement income that covers at least 70 percent of what you made during your working years. Depending on your age, Social Security may help close any shortfall. But that’s if you are of the age to collect, as discussed in the following section.

It’s smart to work not only with a divorce lawyer but also with a financial professional to develop a solid, realistic plan for retirement. If you don’t have someone in mind to work with, a family law attorney with deep roots in the community can suggest individuals for you to choose from. 

Social Security

Despite being divorced, you may still be able to collect Social Security benefits through your ex-spouse if you were married long enough. Even if you went through a high-conflict divorce or are not on good terms with your ex currently, they cannot stop you from collecting these benefits if you are eligible. Likewise, you do not need the permission of your ex-spouse to apply for social security benefits, nor do you need them to have previously completed an application for themselves. 

However, you will need information about your spouse (e.g., their Social Security number) to complete your application. Though several criteria and circumstances can affect your eligibility, if you meet all of them, don’t do anything to disqualify yourself, and apply for social security benefits online, on the phone, or in person, you may be able to collect social security benefits after divorce based on your ex-spouse’s work record.

To be eligible for benefits through your ex-spouse, you must meet the following criteria. Under current law, your marriage with your ex-spouse must have lasted 10 years or more. You would automatically be ineligible if your marriage were shorter than that. Your ex-spouse must also be 62 (the minimum age for collecting benefits) or older, and you are unmarried. 

Should your ex-spouse have remarried, you will still be eligible for benefits so long as you remain unmarried. But if your ex-spouse is alive and you remarry, your benefits may be paused. If your new spouse dies or your new marriage ends, such as through annulment or divorce, you may be able to start receiving benefits again. If your ex-spouse dies, you may also be eligible for Survivor benefits. However, if you remarried before their death, you will still be unable to collect.

Though you may have continued to work after your divorce, your average lifetime earnings may remain less than your spouse’s. In this circumstance, you would still be eligible based on your ex-spouse’s work, as long as you meet the other criteria. Generally, when you apply, the Social Security Administration will pay you the higher of the two, your work record or your ex-spouse’s. In other words, if your average lifetime earnings are higher than your ex-spouse’s, you will not be paid benefits as an ex-spouse. 

If you divorced your spouse when you were young, you may be waiting years to collect your ex’s Social Security benefits. That said, as long as you were divorced at least two years before filing, you can collect, starting at age 62. When you do, you will be eligible to receive a percentage of your ex’s benefit amount, around 32.5%. Should you choose to wait until age 67, you will qualify for 50%. If your ex-spouse predeceases you, and you are 67 or older, you could qualify for 100% of that amount.

How to Find a Seattle Family Law Attorney for Legal Guidance in a Gray Divorce 

Divorce is challenging at any age, but a gray divorce can present unique issues. At Elise Buie Family Law, our team of Washington divorce lawyers is experienced in navigating the complexities of gray divorce and can help guide you through yours. Contact us today or schedule a convenient time to speak.