You are in your 60s and have been married for 30+ years, but you are tired of being with your spouse. You have different goals in life. You barely communicate with each other anymore. You can no longer stand to be around them. You are married but feel more like roommates.
This situation is not uncommon. As people get older and the children have moved out, they start contemplating their lives with their spouses. Some people feel happy to spend the rest of their lives with their spouses. Others dread the thought.
As you get into your 50s and 60s, you may feel as if you are too old to get a divorce, but you are really not. These older-age divorces – called gray divorces – have become more common in the past few decades. With people living longer, they no longer want to live the rest of their lives being unhappy. They want to go out and enjoy life as a single person or in a relationship with someone else.
However, there is one main thing you need to be concerned about: money. As you get older, you may be thinking about retirement. So, if you are incorporating a divorce with these retirement plans, you may discover that retirement may not be happening as planned. A divorce means splitting everything, so you will likely end up with a lot less money than you expected. This also means you may have to delay your retirement and stay working a few years longer.
Gray divorces often cause the parties involved to suffer various financial blunders. They make mistakes because they are not prepared for the consequences – or rather, they do not think about them. They are primarily concerned about the present, but with retirement on the line, they need to be thinking 10, 20, and even 30 years from now. If you are considering a gray divorce, here are some tips to keep in mind so you can stay financially stable as you enter the next stage of your life.
A divorce later in life is different from a divorce in your 20s or 30s. As you near retirement, there are a lot more ramifications involved, so be prepared. The biggest issue, particularly for women, is feeling rushed into making long-lasting financial decisions. If they are not the ones initiating the divorce, then they may feel unprepared for everything. They may still be in shock about the situation. When the divorce is finalized, they may wonder: now what? Fear can set in, causing one or both spouses to make poor decisions. They may later regret these decisions.
You can avoid regret by being prepared. Do not get taken advantage of during the divorce process. Participate fully in your financial decision-making and take control of the process. If you are given options, be sure to have each option fully explained to you, compare each option to your priorities, and review the pros and cons.
Deal With Debts
In a divorce, you need to split debts as well as assets. However, do not just simply divide debts and assume your spouse will make payments. You also do not want to yourself with an unfair share of marital debts that put you at risk if your spouse defaults. Creditors will pursue either party to the fullest for joint liability, regardless of your divorce agreement. Credit cards, loans, mortgages, lines of credit, and leases are all governed by federal law, while state laws govern divorce.
So what should you do? Uncover any debt problems during divorce. You can do this by running a credit check with all three major credit bureaus on you and your spouse. Ideally, you should try to pay off debts before you are divorced. Otherwise, you can try to refinance them so they become the sole responsibility of one spouse. Have a plan for debt repayment and incorporate it into your budget.
Know How to Divide Retirement Accounts
If you are in a gray divorce, you likely have retirement assets. Dividing these accounts can be complicated. It needs to be done properly or else you can incur penalties and taxes. Failing to divide retirement assets correctly will also result in loss of tax-deferred growth and perhaps your survivor benefits.
Keep in mind that federal law governs most employer retirement plans. Retirement assets may include 401K plans, IRAs, pensions, and profit-sharing plans. You will need a Qualified Domestic Relations Order (QDRO) to divide these assets. A QDRO will likely divide the retirement asset as a lump sum. Plus, it allows you to withdraw cash via QDRO from a retirement asset without a 10% penalty. Withdrawing cash can help you pay bills, pay off debts, or put a down payment on a new home.
Get Assets Valued
Two assets may appear to have the same value on paper, but taxes can make one worth less than the other. An asset’s cost basis, or original purchase price, should be determined upfront before dividing it. Work with a tax expert, financial planner, or forensic accountant to value the assets and protect your rights legally.
Seek Legal Help
Getting through a divorce at any age can be problematic, but it is especially hard when you re nearing retirement. You likely have concerns about money as you end your working years.
Broward County divorce attorney Scott J. Stadler can help you get through your gray divorce with ease. We have access to professionals who can help and can help you understand your legal options. To schedule a consultation, fill out the online form or call our office at (954) 346-6464.