Divorce rates have steadily gone down in the last four decades in most age groups. The notable exception is couples who are 55 years old and up – this group continues to see an increase in numbers. Some common reasons for this phenomenon are the longer lifespans we enjoy, dual incomes mean more financial independence, and the stigma of divorce continues to wane.
Along with the usual logistics of separating, explaining their choice to the children and starting a new life as a single person, there are a variety of unique challenges this group faces. One particularly painful task may be explaining the choice to grandchildren. Less painful but certainly complicated is determining a fair and equitable split of the assets – at this point in life, there is likely a long list of deeply intertwined marital assets to divide, including retirement accounts, investment portfolios and perhaps valuable possessions with a strong emotional component.
Avoid these mistakes
People in their 50s are often at the height of their earning power, but they may be closing in on retirement, either by choice or for other reasons. With a smaller window to economically recover from the split than younger couples, it is vital to be careful about finances. Finance experts point out several potential mistakes to avoid:
- Keeping the house: Houses are often the safest investment, but they are expensive to maintain, and taxes can be burdensome. Depending upon what an attorney says, it may make sense to get a larger share of the retirement accounts.
- Incurring retirement fund penalties: Taking out funds early can mean paying taxes on the money, but some (like a Roth IRA) do allow withdrawals.
- Rolling all retirement accounts into another one: Those who are 59-and-one-half may have a one-time chance to take out money without penalties, which can help cover expenses during the transition. This must be per a qualified domestic relations order.
- Taking out too much: It is good to have cash on hand, but it can be a mistake to take out money that then sits in a lower-interest bank account.
Attorneys help avoid these mistakes
Family law attorney with experience handling grey divorce can provide useful insight into addressing the above concerns as well as those questions or concerns unique to the couple’s estate. It can make a difference as clients move into this exciting new phase of their lives.