Since 1990, the divorce rate among Americans over the age of 50 has doubled. If fact, one in four divorces now involves a couple in this age group. On top of the emotional impact of a long-term marriage ending, late-life divorces can have a devastating effect on financial well-being in retirement. Coming at a time when there is often more wealth to lose, there is also less time to rebuild assets. If you have friends or relatives contemplating divorce, sharing the following information may improve their situation.
For starters, it’s a good idea to obtain an accurate picture of potential debts by getting credit reports for both spouses. If a couple resides in one of the nine states with community property laws, each spouse is responsible for half of everything the other owes – even if the debt is only in one name.
When it comes to splitting pensions and retirement plans, agreeing upon percentages (rather than fixed amounts) can be less risky if the markets turn down and more fair if the markets swing up. Getting a Qualified Domestic Relations Order can protect the husband and wife from incurring tax penalties when funds are transferred to another account. Beneficiary information on remaining accounts should be updated immediately.
Emotions can cloud the decision of whether to sell or keep the house. A spouse who keeps a home in lieu of other assets may not have the finances needed to maintain it. On the other hand, homes can come with capital gains tax advantages other investments might not enjoy.
Spouses who have earned lower Social Security benefits than their mates can draw half of their exes’ monthly benefits at the appropriate age, as long as they were married for 10 years or more and they start collecting benefits before remarrying. And this won’t impact the other spouses’ benefits.
Once everything is finalized, it’s important not to become too risk averse. With inflation and today’s longer life expectancies, portfolios need to grow to provide adequate security. We’re happy to help guide someone you care about through these rough waters so they can look forward to a happier retirement. Call your Denver Financial Planner, Jordan Dechtman at 303-741-9772, email him at Jordan@JordanDechtman.com or visit our website to schedule an appointment at www.JordanDechtman.com.
Written by Securities America for distribution by Jordan Dechtman.