REMINDERS FOR DIVORCING COUPLES OVER THE AGE OF 50

On behalf of Askvig & Johnson, PLLP

When residents of Minnesota are asked to consider what types of couples are most likely to get divorced, many of them may believe it is the younger couples who have been married for a short amount of time. However, that is not always the case. A phenomenon known as gray divorce is becoming more and more common these days. Gray divorce occurs when a couple over the age of 50 decides to end their marriage.

Some may believe that individuals over age 50 have had a lot of time to plan for retirement and, therefore, it is at the bottom of their list of life concerns. However, that is not always the case and throwing a divorce into the mix later in life can certainly make the possibility of retirement even scarcer. In order to avoid running into problems with the inability to retire after divorce, there are a few things older couples can do upon deciding to get divorced in order to set themselves up to retire at the same age they would have expected to retire as when they were married.

First of all, it is important for each of the individuals to think carefully about what assets would be most beneficial for them to keep when they go through the division of property. Many times, people will be immediately inclined to fight to keep the house. However, houses are more likely to have unexpected and costly expenses, which could make a person's financial position difficult in the future.

The division of assets outside of tangible property may include investments. When these assets are divided in a divorce, it is important to keep in mind the tax implications of such divisions. For example, certain investments will be taxed more heavily than others. For example, when one spouse is entitled to a portion of the other's 401(k) plan, it is important that the spouse understand that there is a one-time opportunity to withdraw that money without tax penalties. However, the spouse also must be careful not to take advantage of this opportunity and withdraw too much money, which is a common mistake in divorcing couples over 50, but who are under the retirement age.

It can be confusing and difficult for divorcing couples to remember all of these pieces of advice in addition to working through all of the emotions that will likely arise during a marital dissolution. Nonetheless, it is important to be mindful of these issues when divorcing in later life.

Source: Huffington Post, "4 Divorce Mistakes ThatCan Derail Retirement," Marilyn Timbers, Aug. 27, 2013