According to numerous studies, older adults are getting divorced more than ever before. Many older couples find that once their children are grown up and out of the house, they no longer have anything in common. While divorce may seem like the easy answer, it can make your retirement more difficult.
When you have shared your finances with someone for so many years, it can be hard to strike out on your own, particularly later in life. In addition to learning how to survive on half the income, it can be difficult to divide up the assets. Older adult couples may have 401(k)s, individual retirement accounts, pensions and other assets to deal with during a divorce. An attorney who specializes in financial matters of a divorce can help determine what needs to be done to make proper transfers. For example, if you plan on dividing a non-IRA retirement plan, you will need a Qualified Domestic Relations Order. Otherwise, the amount you transfer to your spouse will qualify as taxable income to you.
People who divorce later in life often fear that they will not have enough money to get through the rest of their lives. Those who divorce at younger ages can often just earn back the money they lost by working. Older people, however, may not be able to make up the money they lose in the divorce, and therefore run out of money before they pass away. Some of them may even have elderly parents or adult children to support, many of whom still live with them.
To avoid some of the complications that come with gray divorce, it is important to plan and prepare for any financial complications that may come your way.
Source: CNBC, “A costly ‘gray divorce’ can upend your retirement plans,” Tim Sobolewski and Wendy B. Pegan, June 21, 2017