Deciding to divorce is never easy, but it gets especially complicated when you have already retired. With finances, healthcare and living arrangements to worry about, there is a lot to think through.
There are 5 key things to keep in mind if you are considering divorce after retirement.
1. Splitting retirement assets
One of the biggest financial challenges of later-life divorce is figuring out how to divide retirement savings and pensions fairly. This often requires insight from an accountant or financial advisor to understand all of the options and ramifications. According to U.S. News & World Report, the average retirement account balance for Americans aged 65-74 is $426,070.
2. Health insurance changes
Health insurance is another area that will likely require adjustment post-divorce. It may affect Medicare enrollment timing and costs. Consider your available options carefully as you come to your settlement agreement.
3. Housing transition
Deciding who gets to stay in the marital home and who has to move can be emotional. Downsizing or relocating altogether is often required for one or both spouses after divorce. You also need to consider factors such as income, age and health.
4. Estate plan updates
With divorce comes the need to revise estate planning documents like wills, trusts and beneficiary designations on retirement accounts. This ensures assets go to the intended recipients and avoids unwanted disputes down the road. An estate planning attorney can handle the revisions.
5. Tax implications
The division of marital assets due to divorce can trigger taxes and penalties if not done properly. Work with a tax professional to minimize the negative tax consequences. Rules around alimony, home sales and retirement account withdrawals can be especially tricky.
Divorce after retirement brings unique challenges. With some forethought, you can achieve the fair outcome you desire.