A divorce often results in a host of financial challenges. This is especially true when it comes to gray divorces. If you are getting a divorce while over the age of 50 or after retirement, you may experience significant difficulties due to the need to live on a fixed income with very little opportunity for income growth. However, there are some things you can do to live comfortably enough after your divorce, despite major changes to your finances.
What Should I Do if My Divorce Settlement Is Not Enough?
In many cases, a divorce settlement might not be enough to allow you to meet your living expenses after the divorce, or the resulting financial issues may not allow you to truly enjoy your retirement. In times like these, you might want to consider the following ways to increase your income:
Increase your Social Security benefit—What you may not realize after divorce is that your Social Security benefits do not have to only be based on your own earnings record. If your ex-spouse has a much higher earnings record than you do, then you can increase your monthly Social Security benefits. As a divorcee, you can receive up to half of your ex-spouse’s monthly Social Security benefit. This means that even if you were a lifelong stay-at-home parent without a qualifying earnings record for Social Security benefits, you could still receive benefits based on your ex-spouse’s benefit. Even if you did have an earnings record, if half of your ex-spouse’s benefit amount is higher than your own benefit, Social Security will make up the difference and increase your total Social Security benefit.
Get back in the workforce—Although it is difficult to envision working at the ages of 60, 70, or older, it is increasingly common for gray divorcees to find a part-time job to supplement their income. However, there are a few things to keep in mind before working during retirement:
If you start working any job after your full retirement age (age 66 for those born between 1943 and 1954 or age 67 for those born after 1960), you have no income limits that would impact your Social Security benefit.
If you start receiving Social Security benefits before your full retirement age, then your monthly income limit is $1,520. If you earn more than that amount in a month, your Social Security benefit amount will be reduced by $1 for every $2 you earn above the income limit.
Invest—When dividing investment and retirement accounts during the divorce process, be sure to use a QDRO, or qualified domestic relations order. This will ensure that any funds distributed to you will be placed in your own investment or retirement account. You can then seek the help of a financial advisor to see how you can invest what is left from the divorce in a way that will optimize your gains and reduce your risks as you enter retirement. With the proper investments, you might be able to ride stock market gains into a very comfortable retirement.
Contact a Wheaton IL Gray Divorce Attorney
If you are getting a gray divorce, remember that a “fixed income” is not the same as “no income.” You can figure out ways to live comfortably even if you do not have the financial resources that you did while married or before your retirement. If you need help with a complex divorce, including dividing investments and retirement accounts, reach out to a DuPage County divorce lawyer at 630-871-1002 for a free consultation. Andrew Cores Family Law Group will comprehensively review your situation with care and make sure you make the best decisions as you approach retirement after your divorce.