Based on information from Bowling Green State University’s National Center for Family and Marriage Research, the divorce rate for individuals over 50 years old has doubled since 1990. Virginia residents who are considering getting a divorce and are about to retire should take into account the financial effects it will have.
They should first consider the state of their finances, specifically where their income is coming from and what their expenses are. Being aware of current spending habits and how they will change after a divorce can guide their financial decisions.
People who are nearing retirement and will soon divorce should also realize that they may need to find additional avenues of income. The Government Accountability Office reported in 2012 that a divorce can lead to a 23 percent reduction in income for men and a 41 percent decrease for women. To help offset the financial burden a divorce will cause, divorcees can think about applying for Social Security, downsize by selling their home or get a part-time job.
If there are closely approaching financial milestones, it may be more prudent to delay a divorce. For example, an individual’s Medicare eligibility at 65 years of age would be invaluable if he or she will no longer be covered by a spouse’s insurance. The costs for Medicare are considerably lower than those for a health care plan from the federal marketplace, state heath exchange or COBRA. Future divorcees should also consider their retirement benefits and the possibility of a reduced amount as many states’ laws may require a split of all retirement assets.
Individuals who are nearing retirement and are getting a divorce should be aware of the financial ramifications it can have. A family law attorney can take this into account when negotiating a property division agreement and determining which assets will benefit the client most.