If you are a Baby Boomer and getting a divorce, you are not alone. If you haven’t heard, gray divorce is trending. According to research from the National Center for Family & Marriage, the divorce rate for the 50 and over crowd doubled between 1990 and 2010.
As a Baby Boomer, you are in a financially unique position compared to your younger divorcing counterparts: You have less time to recoup money saved for retirement. As a result, you have more to think about and it’s more important than ever to make the right financial choices during and after your divorce.
Here are some tips to secure you financial future:
1. Hire a financial planner.
If you have significant assets, we highly recommend hiring a financial planner who can walk you through what you’re entitled to receive under California’s community property laws. Having a professional run the numbers can make all the difference in your settlement. Look for a “certified financial planner.”
2. You may want to think twice about keeping the house.
Often, it’s not wise to choose the house over retirement assets. Many couples think their house is their most valuable asset, when in fact it would have been better for them to sell it. Usually, it’s better to sell the house, pocket the proceeds and share in your spouse’s retirement.
Look at it this way: your spouse’s retirement assets will grow in the future, whereas a house will cost money to maintain and you can’t predict the real estate market, or your home’s value.
3. Don’t waste your ex’s retirement money.
If you’re tempted to take your spouse’s retirement money and travel for the next year, you may want to think twice. Experts advise that spouses roll over their ex’s retirement money into their own IRA or employer-sponsored retirement fund rather than squandering the assets.
You want to keep withdrawals from your ex’s 401(k) or 403(b) to a minimum. It’s better for you to leave those funds alone so they can continue growing tax-deferred until you retire.
4. Pursue hard retirement assets over spousal support.
If you’re faced with the option of spousal support over retirement assets, go for the hard retirement assets instead. Spousal support is “taxable” and it’s meant to be a short-term arrangement.
5. Consider your spouse’s retirement benefit.
If you were married for 10 years or more and you are at least 62, you may be able to collect up to half of your spouse’s Social Security retirement or disability benefit, even if your spouse has remarried. What’s more, if you receive benefits on your spouse’s earning record, it will have no impact on your spouse’s benefits, or what their current spouse may receive.
Looking for a Los Angeles divorce attorney? Contact our firm for a free consultation!