While the overall divorce rate is declining, in one key demographic it has doubled since 1990 -- people over 50. Many of these folks still have plenty of healthy, productive years left (that they're choosing not to spend in an unhappy marriage). This is also a time when they should be thinking about having enough money to to comfortably retire on, if they haven't retired already. Therefore, financial decisions they make during their divorce are especially important to how they will live in their retirement years.
Many people who divorce in the latter half of their life have already earned the bulk of their lifetime wages. Retirement savings, investments and government programs like Social Security and Medicare will be an important source of income in the upcoming years. It's important that you and your attorney work to get your fair share of the assets you've accumulated over the years and the benefits to which you're entitled.
Make the Most of Your Retirement Savings
How your various retirement accounts are divided between you and your spouse depends on the state in which you live. However, you both want to avoid unnecessary tax penalties as you divide the funds. Many attorneys and financial advisors recommend getting a qualified domestic relations order. A QDRO can help the money keep its tax-deferred status.
Consider Your Eligibility for Government Benefits
If you and your spouse were married for at least a decade, you can collect Social Security spousal benefits once you reach eligibility age until and unless you remarry. This can be a significant source of income. This may impact the timing of your divorce and/or your decision to remarry.
Another government benefit that may impact the timing of your divorce is Medicare, which people become eligible for at 65. If you divorce before 65, be sure that you have another source of health insurance.
Women Are Particularly Vulnerable
"Gray divorce" can be particularly financially difficult on women, who are more likely to be out of the full-time workforce than men. It's generally more difficult to get back into the workforce as you get older. Therefore, it's essential that women get the amount and duration of spousal support needed as they head into single life after 50.
Regardless of your gender, if you're part of the "gray divorce" phenomenon, it's essential to have sound guidance from financial and tax professionals as well as, of course, experienced legal advice. It's best not to rely on the same people who have handled your and your spouse's money.
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