If you are at least 50 years old and getting a divorce, you are not alone. In fact, according to CNBC, the rate of divorce among adults 50 and older has doubled over the past two decades. While divorce can happen to anyone, it is important to know that there are unique considerations for what is known as a “gray divorce.”
Divorcing at an older age can have huge financial consequences, especially for your retirement plan. Because of this, you must be especially careful while ending your marriage. Here are some pitfalls to avoid.
1. Failing to divide retirement accounts properly
You might assume you only need to include retirement accounts in the divorce settlement and that is it. However, if you tap into retirement savings too early, you could still have to deal with the early withdrawal penalties. You’ll likely want to make sure you protect all retirement assets by writing a qualified domestic relations order with the help of an attorney. This could help ensure you can split the funds without facing surprise tax consequences.
2. Ignoring tax implications
Almost every financial choice you make could affect your taxes. For example, if your spouse is willing to hand over an investment account, you may be happy. However, keep in mind that the gains may come with a tax bill. Be careful when making any financial decisions, from monthly support payments to taking certain assets over others. While some decisions may give you more wealth upfront, you may lose a lot when it comes to tax time.
3. Hiding assets
You have probably accumulated a lot of assets and wealth over the years. If your marriage has lasted several years or decades, you may fear losing a lot of your property or money in the divorce. However, do not fall into the temptation of hiding your assets. If your spouse finds out, you could face serious financial and legal consequences.