Gray Divorce in New Jersey: How to Protect Your Retirement Savings
Over 50 and facing divorce? For many spouses in New Jersey, a “gray divorce” means untangling complex financial ties built up over decades – just as retirement is on the horizon. Unlike younger couples, there’s often little time to rebuild lost savings or restart careers, which makes retirement planning an essential part of divorce for silver splitters.
Understanding how divorce affects retirement security in New Jersey can help both spouses make informed decisions and safeguard their long-term future. Let’s take a look at some key issues you should know about.
Retirement Accounts and Pensions
For older adults in New Jersey, retirement accounts are often one of the largest marital assets. Under NJ law, most retirement savings accumulated during the marriage are considered marital property and subject to the state’s equitable distribution law. This includes:
401(k) and IRA accounts – contributions made during the marriage can be divided, often through a special court order known as a QDRO (Qualified Domestic Relations Order).
Pensions – even if one spouse never worked outside the home, they may still be entitled to a share of the other spouse’s pension benefits earned during the marriage.
Government and military benefits – special rules apply, but they too can be divided.
It’s important to recognize that “equitable” doesn’t always mean “equal.” Courts consider the length of the marriage, each spouse’s contributions, and future needs when dividing assets.
Social Security Benefits
Social Security is another key factor for divorcing couples nearing retirement. In some cases, a divorced spouse may be eligible to claim retirement benefits based on their ex’s work record, as long as:
- The marriage lasted at least 10 years.
- The spouse claiming benefits is unmarried and at least 62 years old.
- Their own benefit is less than what they would receive from their ex’s record.
- This can provide an important safety net, especially for spouses who left the workforce to raise children or support the household.
Healthcare and Insurance Considerations
Healthcare becomes a pressing concern in gray divorce. If one spouse relied on the other’s employer-sponsored insurance, they may need to find new coverage after divorce. For those not yet eligible for Medicare, this can be a significant expense. New Jersey residents may qualify for coverage through COBRA temporarily, or through the Affordable Care Act marketplace, but planning ahead is key to avoiding gaps.
Alimony in Retirement Years
Alimony often plays a larger role in gray divorces, especially if one spouse has been out of the workforce for many years. In New Jersey, alimony is determined based on factors such as the length of the marriage, the couple’s lifestyle, and each spouse’s earning capacity.
When it comes to retirement, however, there is an important legal safeguard: New Jersey law creates a rebuttable presumption that alimony should terminate when the paying spouse reaches full retirement age (as defined by Social Security). This means the court starts from the position that alimony ends at retirement, unless the receiving spouse can prove why support should continue.
The presumption can be challenged if, for example, the dependent spouse demonstrates ongoing financial need or unusual circumstances, such as illness or lack of retirement savings. On the other hand, if the paying spouse retires early (before full retirement age), they must show the retirement is made in good faith and not simply an attempt to avoid alimony obligations.
Protecting Your Future
Protecting retirement security during a gray divorce requires a careful strategy:
- Hire experienced professionals – a New Jersey family law attorney and financial advisor can work together to ensure you fully understand your rights.
- Value all assets accurately – don’t overlook pensions, annuities, or other long-term accounts.
- Consider taxes – withdrawals from retirement accounts may have tax consequences that affect the true value of your settlement.
- Plan for longevity – with life expectancy increasing, your retirement dollars may need to stretch further than expected.
Gray divorce can feel overwhelming, but with the right guidance, you can secure a stable future. Divorce at any age is a challenge — but with thoughtful preparation, it can also be an opportunity to redefine what retirement looks like for you.
Need help with retirement strategy in your divorce? We can help. Contact us today at 888-888-0919 to schedule a confidential consultation with one of our family law specialists.
