A divorce between married couples who are over 50 years of age (i.e. a grey divorce) is an increasing trend. Since the 1990s, the number of grey divorces has doubled. Partly due to the diminished stigma around divorce as well as longer lifespans, more senior couples are considering and choosing to end decades-long marriages. However, there are unique challenges for couples who divorce near or during retirement, one of which is dividing their retirement accounts.
Considerations for Dividing Retirement Accounts
Over decades of marriage, couples may have accumulated sizeable retirement accounts designed to provide for them in their later years of life. However, during divorce, those funds will need to be divided between spouses, meaning each person will have much less to live on during retirement than they planned. When individuals are over 50, they have much less time to build their savings back up before retirement than younger couples. It's highly recommended that senior couples hire financial planners as well as divorce attorneys to help ensure that they can support themselves during retirement as divorcees.
Dividing the Accounts
The type of retirement account to be divided during divorce will affect how a couple must divide it. There are two methods:
Withdrawing funds from retirement accounts, even if the funds get rolled into a new account, has the potential for triggering tax penalties. Using the proper document to divide a retirement account helps ensure that individuals are not subject to any extra penalties. The divorce decree signed by a judge is not enough; an individual must submit the document to their retirement account provider to ensure that the funds are split properly.
Another consideration for an individual undergoing a grey divorce is to update the beneficiaries on their retirement accounts. They likely want to remove their ex-spouse and designate their child or another close relative to inherit the account instead. An estate planner and a divorce attorney may offer advice about when it is wise to finalize the update.
Although senior citizens may have more at stake financially when they decide to divorce near or during retirement, their finances don't have to take a major hit when they receive help from professionals like financial planners and family law attorneys.
If you are unable to work because of an illness or injury, you may qualify for social security disability payments. This money comes from a fund you have probably contributed to during your time in the work force, and it is likely that you have the right to disability payments using this money. As an attorney specializing in social security disability, I have a great deal of experience in helping clients determine if they qualify for disability payments. I hope that this blog will help people who have been injured understand what it means to qualify for social security disability benefits and how to go about getting that help.