The amount of alimony payable in a gray divorce can come as a surprise.
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Gray divorces refer to couples aged 50 and over. I recently spoke to Lili Vasileff, a Certified Divorce Financial Analyst, Mediator, and Divorce Finance Litigation 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 divorce, including Money & Divorce: The Essential Roadmap to Mastering Financial Decisions, published by the American Bar Association.
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 historical basis for the connection between emotions and sustenance. In earlier times, divorce could only be due to marital misconduct. Spousal misconduct includes cheating, abandonment, reckless spending, concealment of assets, addiction and abuse. Even among the Babylonians, a man who abused his wife had to pay financial support to feed her and any children.
In the United States, women had no property rights during their marriages until the early 20th century and faced significant gender bias in financial matters until the 1970s. US divorce law used alimony to create a level playing field for a woman to earn a living after a divorce. The duty of maintenance was linked to guilt. Alimony was the state’s right to publicly punish a guilty spouse who broke the bonds of marriage. 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: Are there federal or state laws that regulate child support?
LV: The alimony laws differ in each state, and depending on the state, there are different types of alimony: temporary, rehabilitating, reimbursing, and permanent. Spousal support can be paid as a lump sum (all at once) or in regular payments over a period of time. Monthly payments are the most common.
In determining whether child support is necessary and in determining the type, amount, duration, and nature of payment, state laws provide 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?
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 formula-based approach to calculating alimony. Some set guidelines, while others allow the courts more discretion in determining alimony.
CH: At the beginning of the divorce process, is it easy, difficult, or easy to predict the amount of alimony?
LV: Usually, after child support and the division of assets, alimony is the last piece of the financial jigsaw to be finally settled in a divorce. Since alimony is closely tied to the rules of the game surrounding these other issues, alimony itself – the amount due annually and the length of time a spouse will pay it – is unpredictable.
CH: What is happening in different states regarding child support reform?
LV: TThe hottest button pushing support reform is lifespan Alimony. Both spouses, whether When you receive or pay something, you feel bound by a legal obligationt often does not create financial relief and finality in the long run. As of 2018 only New Jersey, Connecticut, Vermont, North Carolina, West Virginia, Florida, and Oregon may grant perpetual maintenance. Permanent maintenance is becoming increasingly rare.
CH: What shocks many financially dependent spouses in long-term marriages in terms of spousal support?
LV: Many financially dependent spouses in long-term marriages expect lifelong alimony. However, the reality is that spousal support for life is only possible as long as your ex-spouse is employed. Most courts are reluctant to order your ex-spouse to work beyond your retirement years to pay you spousal support. For the spouse expecting spousal support, the window of opportunity in between is clear The timing of divorce and retirement jeopardizes financial security and increases stress:
- To generate replacement income from your half of the marital property. Tip: Maximize your share of assets that can generate guaranteed income (e.g. annuities and annuities) and avoid risky investments.
- To force you back into the labor market after retirement age. Tip: Look for post-divorce employment opportunities that offer health insurance.
- To force you to downsize your lifestyle. Tip: Ask about financial projections and understand the underlying assumptions for achieving financial goals.
- To force you to claim Social Security benefits before full retirement age. Tip: Find out about your entitlement to social security benefits.
CH: How are older women particularly vulnerable financially?
LV: Older Women are at risk in several ways. Savings for emergencies are generally low and many deplete retirement savings before retirement. For older women, the loss of accumulated wealth and income is most severe when they have been inactive for a long period of time.
women aged 63 and over in the USA Those who have gone through a gray divorce have a poverty rate of 27 percent, That is nine times higher than for married couples of the same age.
Gray divorced women have relatively low Social Security benefits and relatively high poverty rates. (Note that the maximum Social Security benefit in 2023 is $4,555 per month at age 70 and $2,572 per month at age 62.) A 2018 Nationwide survey found that 62 percent of women expect to receive Social Security benefits will be their main source of income in retirement.
Federal law created rules for ex-spouses claiming Social Security benefits based on their ex-spouse’s income record. 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 submit your application.
- If you claim SSA benefits before your ex-spouse reaches full retirement age, the benefit is reduced by about 7 percent for each year used before full retirement age.
- At age 65, in addition to being eligible for SSA benefits, you are also eligible for Medicare (if you paid into SSA while you were alive or purchased Medicare coverage).
CH: What’s the most important advice you can give to gray couples divorcing?
LV: Make your financial security your priority. Maximize your cash flow from all sources. Plan 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.