In the United States, divorce rates are declining at a rapid rate – except with people over 50 years of age. Sadly, about one in four couples over 50 are deciding to make the break and get a divorce.
Why do you think this phenomenon is occurring? In truth, it appears that because people are living longer and have more opportunities open to them, they are more likely to grow apart. Once the children are grown and gone, many marriages unfortunately begin to slowly dissolve. Additionally, given that more women are in the workplace and are financially independent, they no longer have the financial motivation to remain married, which was not the case decades ago.
Divorcing over the age of 50 does not come without some major pitfalls. As you would expect, divorce will impact your retirement, will result in legal fees, and will require you to support yourself, which can quickly drain any savings that you may have had.
Divorce Over 50
That said, you can protect your financial future by avoiding the following mistakes if you are over 50 and plan on getting a divorce:
- Assuming that It Will Be Easy to Deal with What Was Once the Family Home: Keeping up your family home by yourself can be a daunting financial task. Before you decide to keep the house, especially if the children are out of the house, figure out if you can pay the mortgage, taxes, and any emergency repairs yourself. If that is not possible, then you can find appropriate, less costly alternatives. For example, one of our clients decided to sell the family home and move to an affordable adult community at Sun City Hilton Head in South Carolina. He has never been happier. In other words, know the costs of keeping the house and explore your options.
- Being Unrealistic About Your Expenses: When you have to pay all of your household expenses on your own, you may come to the conclusion that you will have to make some life changes to afford your monthly living expenses. So, do not make the mistake of underestimating, or failing to sit down and make any estimate, of your likely monthly expenses. Planning ahead will save you lots of stress in the long run.
- Not Having an Awareness of Your Asset Picture: In many marriages, one spouse normally has a good understanding of the family finances. They know how much money is in the family’s investments and savings accounts. The other spouse may not be as educated on the family finances. If you are that spouse, then you will want to inventory all of your joint and separate assets before making any attempt to split them between yourself and your spouse. You should also make note of any life insurance policies and retirement accounts.
- Being Unaware of Your Debt Load: In an equitable division state, like South Carolina, you could both be liable for any jointly held credit cards, loans, or other debts incurred during the marriage. That means that when you are contemplating a divorce, you should get a credit report for yourself and your spouse, so you understand how much debt you have individually and as a couple.
- Transferring Funds from Your Spouse’s Retirement Account into an IRA: If you fund your IRA with a part of your spouse’s retirement account and make withdrawals before the age of 59.5, you will pay the standard 10% early withdrawal penalty. Protect your assets during your divorce over 50 by using a “qualified domestic relations order,” which will let you make a one-time withdrawal from your ex-spouse’s 401k, without paying the penalty.
- Trying to Secretly Stash Money or Other Assets from Your Spouse: If you and your spouse have a lot of money, you may be tempted to hide some of your assets so it appears that you have less money, and thus less to pay in alimony or other support. Avoid that temptation. It is not only bad pool, but it is also illegal and will only result in more legal fees and court appearances when the assets are ultimately found. Some of the consequences you could face include giving your ex additional money, being found in contempt of court, and you could face perjury or fraud charges, which expose you to serious financial liability or worse.
- Forgetting to Consider the How Your Taxes Will be Impacted: Almost every decision that is made during your divorce is going to earn you a tax bill. You will need to carefully explore your tax obligations when it comes to alimony, paying the mortgage, and the household expenses. You may find that it is more beneficial to have a brokerage account or retirement plan. Be sure to consult with a tax accountant before you make any financial decisions during your divorce.
- Neglecting Your Insurance for Healthcare: If your spouse’s health insurance provides you with coverage, and your Medicare coverage has not started yet, you could be in for an expensive shock when you have to purchase your own healthcare insurance. So, keep healthcare insurance matters on top of mind before the divorce. You may conclude that a legal separation is the better option so that you can remain on your ex-spouse’s health insurance policy.
- Continuing Support to Your Adult Children: Of course, we all want to help support our children even into adulthood. However, be careful not to make help for your adult children the priority over your own wellbeing with regard to retirement income.
- Failing to Consider Costs of Divorce Advisors: We sometimes make the mistake of thinking that our divorce advisors are our friends, and we forget that their time can be costly. Remember, the amount of money you pay your divorce advisors will come out of your settlement. So, it is vital that you keep an accounting on how much they are spending on your behalf.
In conclusion, divorce over 50 can be financially and emotionally devastating. Yet, you can soften the blow a bit if you plan carefully, and you can save yourself from financial hardship in the future.
If you need assistance, or legal advice regarding your divorce over 50, please contact Sun City Divorce Attorney, Addison Fender at the Fender Law Firm. We handle all types of family law cases, including divorce, custody, visitation, child support, paternity determination, and cases involving the Department of Social Services.
Our experienced attorneys are here to provide you with knowledge, and to guide you through this difficult time in your life. Call 843.379.4888 or contact us online today.