Divorcing Baby Boomers Often Have Concerns About Retirement

Retirement Benefits Are Treated Differently From Other Forms of Property

Decades ago, Baby Boomers helped pioneer the growing social acceptance of divorce among younger couples. Today, according to Bloomberg, that pioneering spirit continues among the same generation as they prepare for retirement. Gray divorce rates—divorces involving older couples in long-term marriages—have surged among Baby Boomers in recent years. In fact, roughly a quarter of all divorces now involve someone aged 50 or older. While many Baby Boomers face the prospect of divorce, it is essential to understand that divorcing later in life brings unique financial risks that can complicate retirement planing or a parties’ lifestyle if already retired.

Retirement Plans

For many couples in Texas, a central question in divorce is who will receive the pension, 401k and other retirement benefits. Retirement assets can be complicated and require careful treatment when divided in a divorce. While a pension, or 401k or an IRA—regardless of whose name it is in—is considered community property and can be divided between spouses, specific rules and procedures must be followed.

A Qualified Domestic Relations Order (QDRO) is required to divide a pension or retirement plan properly and avoid costly transfer fees. When a qualified domestic relations order is entered and processed by the pension plan or 401k plan administrator, the owner of the plan (or employee or participant) does not have to pay any taxes or repay the funds – it is simply a transfer or processing of benefits from one spouse to the other pursuant to a divorce.

Legal Help

When divorce occurs close to retirement, consulting a family law attorney is critical. Representing yourself in such a case can be risky, especially when your entire retirement fund is at stake. An experienced attorney will ensure that your best interests are fully represented and protected throughout the divorce process.