Some marriages in Washington start with dreams of eventually enjoying golden years together via solid retirement savings. However, legal unions don't always last forever as evidenced by the significant increase in so-called "gray divorces" since the 1990s. Starting over post-divorce presents challenges at any age. For older couples, however, transitioning back to a single life could mean having to manage the same expenses with half as much income. This could jeopardize retirement assets.
Adults 50 and over going through a divorce may be able to protect important assets by being cautious with spending during the transition process. Also, copies of tax returns, retirement account statements and insurance documents can help a divorcing senior get their finances in order. It's also important to be aware of existing debts, current credit ratings and what's in which partner's name.
Tax consequences can also change significantly during a later-life divorce simply by going from a married to single filing status. For this reason, the lower-earning spouse may benefit from seeking pretax investments. A lower-earning spouse receiving support payments may also benefit from owning a life insurance policy on an ex even after the divorce to protect their income.
Converting certain contribution plan funds to Roth IRAs may further ease the tax burden enough to keep existing retirement assets safe. With Social Security, a party who was married for a decade or more may still receive benefits on their former spouse's record. It can also be wise to make decisions about pension plan arrangements since such plans are considered community property.
The first step most people take when ending a marriage is to contact an attorney. A family law attorney may use insights from a retirement specialist to offer advice on how to fairly split marital homes and other jointly owned assets and properties.