Clients often need to plan for divorce with retirement in mind. The term used to describe this scenario lately is “Gray Divorce”. Clients without young families don’t have to make all decisions based on the impact to the children. When discussing retirement after divorce, there are usually two main items that come to mind: pensions and social security.

Assuming the couple has been married for at least ten years, the spouse with the lower income will qualify for social security at a percentage of the other’s earnings level, just as if they were still married. If the lower earning spouse is married to someone else at the time of collection, this would disqualify him or her from collecting at the level of the first spouse. This means that if this spouse is still remarried at retirement time, he or she will have no choice but to take the benefit either at his or her own earnings level or a percentage of that of the second spouse. However, if the remarriage also lasts for at least ten years and ends due to a second divorce or a death, the lower earning spouse has a choice of a percentage of two spouse’s earning levels to base the benefit on, whichever is greater. The good news is that collecting this benefit at either earning level does not diminish the other’s benefit, so it’s a win-win for everyone.

Pensions are a more complicated scenario. Depending on what type of pension a spouse has, whether he or she acquired part of it prior to the marriage etc. the other spouse may be entitled to a portion of it upon divorce. Normally with a gray divorce, we have a pension valued and a Qualified Domestic Relations Order drawn up so that a client can get his or her portion of the pension when it’s time. There is a formula which was established by a State Court of Appeals case, Majauskas v. Majuskas which is most often used when determining the spouse’s equitable share of the pension. We will however sometimes waive a spouse’s right to a pension in a divorce. For instance, if each spouse has a pension with similar value, it might not make sense to go through the expense and time to have them evaluated. Sometimes parties find it better to swap the value in a pension for a larger portion of real estate or other marital property in equitable distribution.

Should one spouse be in the position of never having worked and been a homemaker all their life especially with a gray divorce, he or she might also qualify for maintenance, what used to be called alimony. Depending on this spouse’s education, health, ability to earn, separate assets, plus a number of other factors, the other spouse might be obligated to provide him or her with monthly maintenance for a period of time.

Those that are alone in retirement may also want to consider what will happen if they become ill or have a deteriorating condition.  I would suggest that crafting an estate plan including a will, health care proxy, power of attorney and living will. These documents, especially advance directives, will be necessary to control who makes decisions for a person when he or she cannot. Those concerned with their children and their possible burden of support should also look into long term care policies.

Deborah E. Kaminetzky, Esq.
Kaminetzky Law & Mediation, P.C.
901 Harvard Court, Suite A
Woodmere, New York 11598
Phone: 516.374.0074