This article by Janet Kidd Stewart in the Chicago Tribune is of interest.
How Divorce after 50 May Affect Your Retirement Savings
Getting unhitched this year?
If you’re past 50, it’s critically important to pay attention to how your retirement savings weathers the storm.
Divorce filings tend to surge at the beginning of the year, experts say, whether from pent-up demand after the holidays or to avoid having to endure another loveless Valentine’s Day.
Parents with kids in school tend to hold out until the end of a school year, but when it comes to couples in middle age and beyond — the so-called gray divorce — the beginning of the year is often clean-slate time, said Tracy Stewart, a certified divorce financial analyst, accountant and financial planner in College Station, Texas.
The overall numbers are getting big. Divorce rates among 50-plus couples roughly doubled between 1990 and 2013, and 30 percent of divorced women 62 and older who are single live at or below the federal poverty line, said Susan Brown, a Bowling Green State University professor who has chronicled gray divorce trends.
Her research on poverty and divorce, which she expects to publish in an academic paper, found that 14 percent of men who divorce after 62 are in poverty. Just four percent of couples that age — the age of Social Security eligibility — are at or below the poverty line.
“It’s scary, because the gray divorce demographic group is growing,” Brown said.
Divorce can be particularly complex for people getting close to retirement, even if there are no children’s custody issues because of an empty nest.
Beyond simply figuring out potential spousal Social Security benefits for marriages of 10 or more years, there are typically more assets to divide.
There often are more illiquid investments, and more paycheck uncertainties as older workers struggle to stay employed at their current salaries.
“Most people treat retirement plans as a last item on the list, below the house and jewelry,” said Howard Phillips, author of “Dividing Retirement Plan Assets in a Divorce” (divorcepensionrights.com).
While the present value of a retirement plan might be a couple’s largest asset, couples going through crisis tend to worry most about current cash flow and assets they use every day, he said.
That might be changing, however.
Fifty-plus couples account for a big share of those choosing collaborative divorce, a type of representation that involves both sides committing to working out the best long-term financial outcome for both parties, rather than fighting through a judge or mediator, Stewart said.
“They’re mature enough to know they’re going to keep seeing each other through adult children and grandchildren,” so they opt for a less adversarial split, she said.
Maintaining the peace is particularly important when there are illiquid assets, such as a pension, that can’t be cashed out by one party, said Wendy Wood, an attorney in Bryan, Texas.
“My preference is always to make a clean break” when dividing assets, Wood said. In real life, however, that’s not always possible. Government workers, for example, might be in line for rich traditional pensions but have few liquid assets with which to cash out a spouse.
Retirement plan divisions in a qualified domestic relations order also are notoriously vague, so paying more attention to the details now is crucial, Phillips said.
And don’t forget to scrutinize your beneficiary designations. Some states treat divorce as an event that essentially nullifies existing designations, and federal labor laws generally prohibit prenuptial agreements from dictating survivor rights when it comes to retirement plans, Phillips said.
Finally, acknowledge the fear surrounding the process as a way to deal with it and move on, suggests Stewart.
“I remember a client who told me she was scared down to her toes by the whole process, and I think most husbands and wives alike are really scared,” she said. “They’re going forward (with the split) but don’t know how much they’ll get or really whether they’ll be able to supplement it because it’s hard to step up a career after 50, particularly when their personal life is in disarray.”
Information provided by K.O. Herston: Knoxville, Tennessee Divorce, Matrimonial and Family Law Attorney.