Divorce rates have actually decreased a little over the last twenty years. But for people over 50 years of age, it has doubled. There were around 300,000 couples over 50 that divorced in 2008, and if the trend continues there will be 400,000 divorces in that age group in 2030.
One ironic reason for the over-50 divorce rate is baby boomers’ affinity for marriage. Many people now find that they are in their second or third marriage when they hit 50, and some experts say these marriages are unlikely to last.
But whether someone over 50 is divorcing for the first time or not, there are almost always higher stakes for people in their fifties, sixties and seventies. By age 50, most people have a long work history, own some real property, have a sizable retirement account, life insurance policies and other possessions.
Also, when people divorce over age 50, there is less time to recover from a bad divorce settlement. Here are some mistakes to avoid:
Forgetting that there are taxes on retirement funds
Retirement accounts like 401(k)s may be the most valuable asset an over-50 divorce may have, aside from the family home. Both parties in a divorce need to understand a retirement account’s actual value. The real value may be around 65 percent of what the statement declares, because the money will be taxed when it is withdrawn.
Not considering the children
Make sure assets that you want to go to your children are set up to go to them, so they don’t go to a future spouse of your ex or to their relatives.
Overvaluing alimony, and undervaluing Social Security
Monthly income may be more important than division of assets. Alimony becomes riskier each year after age 50: there is more chance of the payor dying. Many Pittsburgh property division attorneys recommend getting a life insurance policy on one’s ex-spouse. You should take one out yourself, and not rely on being the beneficiary of their policy. They could change that designation at any time.
An ex-spouse who is not remarried can claim the Social Security benefit rate of the other ex-spouse, so both exes can claim the rate of the higher-earning spouse. This should be kept in mind in negotiations on alimony and property division.
Source: Wall Street Journal Smart Money “Divorce Over 50: 3 Mistakes to Avoid” 3/23/2011