When getting divorce after the age of 50, you may be putting your retirement funds at risk. A study by ING U.S. reports that divorced people are less likely to feel financially prepared for retirement than married men and women and they've often saved $11,000 less than married couples have over the course of the years.
One way to protect your retirement funds is to choose finances over the house in your divorce settlement. Most divorcees assume incorrectly that they are getting a better deal if they get the house at the end of the divorce. In reality, if you choose finances instead you may have more money to retire in the future. Also, a home has a higher probability for ongoing and unexpected expenses. It's future value could depreciate depending on the market.
Also, it is important for divorcees to evaluate the tax implications of retirement funds when they are divided. If one partner in a divorce is entitled to $500,000 from a 401(k) account, then the other will receive $500,000 in Roth IRA. The division of assets won't be equal, because the Roth IRA will provide a bigger payout when taxes are factored in. Also, rolling a spouse's retirement account into an IRA after the divorce can actually cost more money. Depending on your circumstances, it may be better for you to choose a withdrawal instead.
When you are going through your divorce, a professional Los Angeles divorce attorney at Claery & Hammond can help you to work through your case and make wise decisions that will affect your future. Claery & Hammond can also inform you about how your choices will affect your retirement funds in the future. Contact the firm today if you want more information!