Going through a divorce isn't easy at any age, but the consequences can be especially trying for retired couples. In addition to the emotional devastation that often accompanies a marital breakup, retired couples face complicated issues of spousal support and dividing marital property and debt. Questions of retirement accounts and medical insurance benefits become even more critical for those who no longer actively participate in the workforce.
The laws with regard to alimony vary from state to state. As a general rule, though, the amount of alimony a judge orders depends on an analysis of the dependent spouse's need versus the supporting spouse's ability to pay. The length of an alimony obligation can also depend on the length of the marriage. When a retired couple divorces, however, it may be that neither party earns a significant income anymore. Although the dependent spouse's needs in retirement may be the same or less than in his or her earlier years, the supporting spouse's income may be insufficient to justify a suitable alimony award.
State laws on marital property and debt division vary depending upon whether you live in an equitable distribution state or community property state. In both types of jurisdictions, courts divide assets without regard to the name on the title; all attention focuses on whether either party acquired the asset during marriage. Unfortunately for some retired couples, their standard of living may be financed largely -- if not entirely -- from the proceeds of property they acquired during their working lives. Splitting major assets such as investment accounts, real estate and automobiles can be a major setback for couples who no longer have decades of work ahead of them to help them recover.
Division of Retirement Assets
Retirement assets accumulated during a marriage are subject to division in family court, just as houses and bank accounts are. A retiree may find his monthly pension or 401K cut in half or even more. Another devastating effect can occur when the retiree dies because divorced spouses will sometimes remove each other from survivor benefits on a pension plan. This can be particularly prejudicial to a former homemaker who had counted on those benefits to supplement her Social Security in old age.
Medical Insurance Issues
One particularly difficult issue in divorces involving retired couples concerns medical insurance, especially where the parties have yet to reach the age of Medicare eligibility. Some retirees are able to provide medical insurance to their spouses through their former employer. When the parties divorce, however, most plans will not continue to cover the former spouse. As a result, the former spouse may find herself turning to the private market for health insurance at a time when advancing age has caused her insurance costs to skyrocket. Furthermore, as a retiree, she may find it difficult to re-enter the labor market and find an employer that offers health insurance as part of a benefits package.