Gray Divorce Can Be Fraught with Financial Stumbling Blocks
Divorce rates in the United States are on the decrease among younger married couples. This generation is waiting longer to get married, with the couple often living together first. This contributes to the decrease as couples may be more mature and know each other better before entering into marriage. There is one group where the divorce rate is on the rise. The divorce rate for those over 50 is increasing at a very rapid rate for couples in Tennessee and around the nation.
Gray divorces, as they are known, doubled to 10 per 1,000 in 2017 from five per 1,000 in 1990. For couples over 65 the rate tripled from two divorces per 1,000 to six per 1,000 in the same time frame. While the impact of divorce can be devastating at any age the financial implications for older couples can be significant due to older couples often being past their peak earning years. It can cost significantly more to maintain two homes than one. It is also important to remember that when it comes to asset distribution, all retirement dollars are not created equal.
Some retirement accounts, for example 401(k) plans, are not taxed until funds are withdrawn. Contributions to Roth IRA plans are nontaxable and any gains are generally tax-free after age 59 1/2. This makes the Roth IRA dollar worth more than the 401(k) dollar in most cases. Another difficult financial decision concerns what will become of the family home. If there are still children at home it may go to the custodial parent, but if children are grown, selling it and downsizing may be a better solution.
Divorce at any age is difficult in Tennessee. A person divorcing at an older age can benefit from a thorough review of one’s financial holdings. A family law professional can review a person’s financial situation and help one to arrive at a reasonable settlement.