If You Are Contemplating A “Gray Divorce,” Take Steps To Protect Your Retirement Plans
Divorce has become more and more common for individuals who are 50 or older (sometimes called a “gray divorce”). The rate of divorce amongst this age group has roughly doubled since the 1990s, and for those 65 and older, it has tripled.
However, that doesn’t mean that there’s a ‘one-size-fits-all’ approach developing; because being comfortable after retirement is of paramount importance for those approaching retirement, there are some dos and don’ts when it comes to divorcing later in life, which we discuss in greater depth, below. In general, whatever funds a couple has accrued in their 401(k) plans, 403(b) or 457 accounts, individual retirement accounts, pensions, etc. will be divided, and therefore, there are some steps to take to protect yourself.
First and foremost, any and all IRA transfers need to be done properly, and with the assistance of an attorney who has experience in Qualified Domestic Relations Orders (QDROs), specifically. If they are not done properly, you can be subject to significant penalties and taxes.
Put Significant Thought into Each Asset, Including the House
Second, be careful about making sacrifices in order to keep the house. Given the ups and downs of the real estate market, in doing so, you could end up losing your only real estate via bank repossession.
Staying in the family house could also rob you of the chance to boost your retirement income (i.e. saving hundreds each month on the mortgage provides you with a percentage return on your savings, which translates to significant funds for retirement).
Florida follows a policy of equitable distribution of assets, which means that there will be an equitable distribution based on earnings power, length of the marriage, and work records. If you are 10-15 years away from retirement, you will want to value assets in terms of any sustainable income that they are likely to generate, as well as any taxes involved (for example, a 401(k) is going to be taxed at higher rates–and thus worth less–than a taxable investment account).
In addition, once you have reached 62 years of age and if your marriage lasted at least 10 years, you can opt for a benefit of 50 percent of what your ex is due in Social Security (if this is greater than your full benefit). Your attorney can help advise you on the financial planning side of things (and/or may have an advisor that they trust and work with regularly) when it comes to establishing values on all of the important assets, such as insurance policies, IRAs, and pensions.
Florida Divorce Attorneys
If you are contemplating getting a divorce in the second half of your life, speaking with an experienced attorney who has handled many divorces can help put you on the right path and provide you with peace of mind. Contact one of the experienced Florida divorce attorneys of HD Law Partners today for a free consultation to find out more.