Potential problems in a gray divorce Article
People over 50 who get divorced need to pay special attention to important financial situations for their retirement futures.
A divorce at any age can be complicated but Georgia residents who get divorced after 50 years of age can face special challenges, especially when it comes to finances. These concerns have grown as more and more people in the 50-plus age group get divorced today compared to a few decades ago.
According to the National Center for Family and Marriage at Bowling Green State University, the number of divorces among people 50 and older nearly doubled between 1990 and 2009. In 1990, one out of every 10 divorces included a couple over 50. By 2012, one out of every four divorces included a couple over 50. These divorces are called gray divorces.
What are the common pitfalls?
One of the most common pitfalls among people who divorce past 50 is how they approach their property division settlements. Narrowly focusing on only obvious assets like homes, retirement accounts and vehicles can leave people vulnerable to other serious financial implications.
For example, it is normal for couples to have health insurance through one spouse’s employer. After a divorce, the one spouse must often find a new way to be covered. Private health insurance can be costly and divorcing couples should factor in this ongoing expense when dividing assets.
Social Security is another area where spouses can search for alternative forms of income. Depending upon the length of the marriage, ages of the spouses and some other factors, a person can claim Social Security benefits from their ex-spouse’s benefits with no detriment to that spouse.
Why saving the home may not be wise
Women are especially known for feeling the pull to stay in the marital homes notes NextAvenue.com. While this may feel comfortable it may not be a wise financial decision. According to the Huffington Post, spouses are encouraged to pay attention to the long-term costs associated with home ownership. That includes not only monthly mortgage payments but insurance, taxes and general upkeep and repairs. Additionally, if a home is later sold, the owning spouse could end up paying capital gains taxes.
All retirement accounts are not created equal
Spouses interested in splitting retirement accounts should remember that some accounts are funded with pre-tax dollars. That means that any distributions down the road can be subject to tax, reducing the ultimate amount of income earned.
If it is deemed appropriate to split a retirement account, making use of a Qualified Domestic Relations Order can help to prevent early withdrawal fees or taxes.
Consult with a professional
As seen above, there are multiple things to consider when determining how to split assets in a gray divorce. Georgia residents in this situation should always work with an attorney to manage these elements properly.