Older people are getting divorced more frequently than ever before. Divorce can be a significant roadblock for retirement planning and financial security. Although divorcing earlier in life can have a minimal impact on retirement, divorcing after the age of 50 can have huge implications.
Couples who are getting divorced should collect information about all of their retirement accounts, including IRAs, 401(k)s and pensions. Retirement account assets may be awarded to one party, or they may be divided between the divorcing spouses.
Pension plans are handled differently. The spouse who holds the pension has the option of either buying out the other spouse or giving a share of the benefits. To buy out the other spouse, the pension must be valued by actuarial analysis. A court order may order the pension to be split 50/50 or by some other ratio, depending on whether the couple were married for the entire duration of the pension.
If the couple was married for at least 10 years, and one spouse does not have work credits worth at least half of the other spouse’s, then that spouse can receive Social Security benefits. After one spouse’s death, the other spouse can claim the entire amount of the former spouse’s Social Security benefits.
In addition to overhauling one’s retirement plans, a divorced individual should review all estate planning documents to ensure that they reflect the individual’s current wishes.
The elder law attorneys at Hook Law Center assist Virginia families with will preparation, trust & estate administration, guardianships and conservatorships, long-term care planning, special needs planning, veterans benefits, and more. To learn more, visit http://www.hooklawcenter.com/ or call 757-399-7506.