Alimony can be the most shocking part of a gray divorce

The amount of alimony payable in a gray divorce can come as a surprise.

Credit: Rodnae Productions/Pexels

Gray divorce refers to couples aged 50 and over. I recently spoke to Lili Vasileff, a Certified Divorce Financial Analyst, Mediator, and Divorce Financial Expert, to provide gray divorced couples and their adult children with information on important financial issues. Vasileff is a nationally recognized speaker, practitioner, author, and author of four books on the topic of divorce, including Money & Divorce: The Essential Roadmap to Mastering Financial Decisions, published by the American Bar Association.

Article will be continued after viewing

CH: What is alimony?

LV: If one spouse pays alimony to the other after the divorce, one speaks of alimony, spousal maintenance or alimony, depending on the state. There is a historical basis that connects emotion and entertainment. In earlier times, divorce could only result from marital misconduct. Marital misconduct includes cheating, abandonment, reckless spending, concealment of assets, addiction and abuse. Even among the Babylonians, a man who had abused his wife had to make an allowance to feed her and all the children.

In the United States, women had no property rights during their marriage until the early 1900s and faced significant gender bias in financial matters until the 1970s. US divorce laws used alimony to create a level playing field for a woman to support herself after divorce. The maintenance obligation was linked to guilt. Alimony was the state’s right to publicly punish a guilty spouse who had broken the marriage tie. No-fault divorce laws eliminated the right to alimony and replaced it with an entitlement system that reflected current socioeconomic events and social progress.

CH: Do federal or state laws apply to maintenance?

LV: The alimony laws differ in each state, and depending on the state, there are different types of alimony: temporary, rehabilitating, recoverable, and permanent. Spousal support can be paid as a lump sum (all at once) or in regular payments over time. Monthly payments are the most common.

Article will be continued after viewing

In determining whether child support is required and in determining the type, amount, duration and manner of payment, state law provides explicit factors that a court may consider. For example, the length of marriage and exceptional circumstances such as disability usually affect the length of maintenance. Almost 98 percent of child support recipients in the United States are women.

CH: How do different states calculate child support payments?

LV: In general, the criteria that affect the calculation of alimony are as follows:

  • The total combined income of the spouses from almost all sources.
  • The solvency of each spouse.
  • The needs of each spouse.

Many states use a formulaic approach to calculating child support payments; Some set guidelines, while others allow the courts more discretion in determining child support payments.

CH: At the beginning of the divorce process, is it easy or difficult or easy to predict the amount of alimony?

LV: Typically, after alimony and the division of assets, alimony is the last piece of the financial puzzle to be completed in a divorce. Since alimony closely follows the gimmicks of these other issues, the alimony itself—the amount due annually and how long a spouse will pay—is unpredictable.

Article will be continued after viewing

CH: What is happening in different states regarding child support reform?

LV: TThe hottest button driving support reform is lifespan Alimony. Both spouses, whether Receiving or paying, feeling bound by a legal obligationnot often brings no financial relief and no long-term finality. As of 2018 only New Jersey, Connecticut, Vermont, North Carolina, West Virginia, Florida, and Oregon may grant permanent child support. Child support payments are becoming increasingly rare.

CH: What shocks many financially dependent spouses in long-term marriages about spousal support?

LV: Many financially dependent spouses in long-term marriages expect lifelong support. However, the reality is that spousal support for life is only possible as long as your ex-spouse is working. Most courts refuse to order your ex-spouse to work beyond your retirement years to pay you spousal support. For the spouse expecting spousal support, the window in between is clear The timing of divorce and the timing of retirement threaten financial security and increase stress:

  • Generate replacement income from your half of the marital property. Tip: Maximize your share of assets that can provide guaranteed income (like annuities and annuities) and avoid risky investments.
  • To reintegrate you into the labor market after retirement age. Tip: Look for post-divorce employment opportunities that offer health insurance coverage.
  • To force you to downsize your lifestyle. Tip: Ask about financial projections and understand the underlying assumptions about achieving financial goals.
  • To force you to start Social Security benefits before full retirement age. Tip: Check your entitlement to Social Security benefits.

Article will be continued after viewing

CH: How are older women particularly vulnerable financially?

LV: Older Women are at risk in several ways. Emergency savings are generally low, and many exhaust themselves before retirement. For older women, the loss of accumulated wealth and income is worst when they have been inactive for a long time.

women over 63 in the USA who went through a gray divorce experience a poverty rate of 27 percent, that is nine times as high as for married couples of the same age.

Gray divorced women have relatively low welfare benefits and relatively high poverty rates. (Remember that the maximum Social Security benefit in 2023 is $4,555 per month at age 70 and $2,572 at age 62). A 2018 Nationwide poll found that 62 percent of women expect Social Security benefits to be their primary source of income in retirement.

Federal law created rules for ex-spouses who apply for Social Security benefits based on their ex-spouse’s proof of income. You need to know that you are eligible to apply if:

  • You have not claimed your own Social Security Benefit (SSA)..
  • Your own SSA benefit is less than 50 percent of your ex-spouse’s SSA benefit (you receive the greater of 100 percent of your benefit or 50 percent of your ex-spouse’s benefit).
  • You are unmarried at the time of application.
  • They were married for at least 10 years.
  • You have been divorced for at least two years before you apply.
  • If you claim SSA benefits before your ex-spouse’s full retirement age, the benefit will be reduced by about 7 percent for each year claimed before full retirement.
  • At age 65, you are eligible for Medicare other than receiving SSA benefits (if you paid into SSA or purchased Medicare coverage while you were alive).

CH: What is the most important piece of advice you can give gray couples in divorce?

LV: Make your financial security your priority. Maximize your cash flow from all sources. Plan for your longevity and preserve your wealth.

This is the second post in a series on how to prepare and protect your financial wellbeing during and after divorce. Read the first post here.

Comments are closed.