Divorce rates for people over 50 are rising. A later-in-life break-up can be bad news for even the best-laid retirement plans.
In the story-book narrative, couples get married, usher their children out of the nest and enjoy the prime of their lives together until death do they part. In reality, the rate of divorce among Americans age 50 and older has more than doubled since the 1990, according to an analysis by the Pew Research Center.
Alimony introduces yet another twist. Whereas alimony was previously deductible for the payor and taxable for the recipient, changes to the tax law mean that it is neither deductible nor taxable. Of course, knowing how much you can save going forward is the easy part. Most divorces—particularly for older couples—will entail dividing retirement assets. After alimony, this is the biggest source of contention, according to an American Academy of Matrimonial Lawyers survey. Your divorce attorneys and other advisors can help you and your ex reach an agreement.
Don’t overlook health insurance If you’ve been covered under your spouse’s health insurance and are too young to qualify for Medicare, divorce can throw yet another wrench into your finances.
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