Divorcing after the age of 50 will be different than a divorce at a younger age. Although marriages of younger people end for similar reasons, couples over 50 will face other factors related to their age that already exist or are looming. Issues regarding health, retirement, and generating income must be faced, adding stress to a divorce.
Division of Assets
A major aspect of divorce is the division of assets between spouses. If you are over 50, certain assets should be considered under a different light as discussed below.
House – A house will provide you benefits in your later years, such as exemptions and waivers of property tax. Homeowners who’ve turned 62 will be eligible for a reverse mortgage, a source of regular income. Seniors who are eligible for public benefits, like Medicaid, can receive special treatment for their primary residences. Deductions for taxes and mortgage interest and exclusions from gains from selling will also be available.
Retirement – The division of retirement plans may be complex, and it would be wise to seek the advice of a financial planner, lawyer or CPA who specializes in divorce. A Qualified Domestic Relations Order (QDROs) from the court will address retirement benefits. In addition, a retirement plan administrator can provide a summary before you decide on a course of action. Retain an advisor to discuss how distributions, survivor benefits, 401(k) loans and balances, and contributions to retirement plans will be affected by divorce.
Social Security – Those who are 62 years of age or older and married for at least 10 years may receive retirement benefits based on the Social Security of his or her spouse, whose benefits will remain intact. Eligibility for benefits may be up to 50% of the spouse’s. Your retirement benefits can be received at the age of 62 on your record or that of your former spouse’s. You can elect to switch to whomever has the higher benefit upon reaching full retirement age. After being divorced two years, you may receive benefits through your former spouse. Survivor benefits of 100% may also be available if a former spouse passes away.
Part 2 will cover divorce financial planning for those over 50.
Professional Guidance for Divorcing Individuals
John Faggio, CPA, CFP®, CDFA™, is a Financial Divorce Specialist. Faggio Financial helps divorcing individuals reach an equitable financial settlement in a professional, cost-effective, and expedient manner. Call (410) 884-4098 for professional guidance today.