Divorcing Baby Boomers Often Have Concerns About Retirement
Retirement benefits are treated differently from other forms of property
Decades ago, Baby Boomers pioneered the increasing social acceptance of divorce among younger couples. Nowadays, according to Bloomberg, that pioneering spirit is continuing among the same generation now preparing for retirement. Gray divorce rates – divorces involving older couples in long-term marriages – among Baby Boomers have soared in recent years to the point that a quarter of all divorces now involve somebody 50 or older. While many Baby Boomers are facing the prospect of a divorce, it is important to understand that divorcing later in life comes with many financial risks that could complicate a retirement plan.
Why are Baby Boomers divorcing?
Baby Boomers are hardly new to divorce as they are the same generation that first made divorce socially acceptable during the 70s and 80s. However, researchers caution that the growing gray divorce rate is not entirely due to people on their second or third marriages calling it quits. Perhaps surprisingly, about half of all gray divorces involve a first marriage rather than a typically less stable second or third marriage.
The main reason behind the gray divorce upswing is that people are living longer lives. While retirement in the past may have only accounted for 10 to 15 years of a person’s life, it may now last for twice that time. As a result, many Baby Boomers are opting for divorce rather than spend decades of their retirement in an unhappy marriage. Additionally, many Baby Boomers have likely delayed their divorce until the children move out of the house, thus leading to an uptick in divorce for people in their 50s.
Retirement plans in the air
For many couples in Texas a central question in their divorce will be deciding who gets the pension and other retirement benefits. Retirement assets are treated somewhat differently from other types of marital property. While a pension, regardless of whose name it is in, is considered community property and can thus be divided between both spouses, there are important rules and procedures that must be followed.
A Qualified Domestic Relations Order (QDRO) is often necessary in dividing a pension and avoiding expensive transfer fees, according to USA Today. Also, a spouse’s right to a share of the pension is complicated by a number of additional factors, such as who the provider of the pension is. Likewise, just because a pension can be divided between both spouses does not necessarily mean that it will be divided equally, but rather “fairly,” which is a term open to considerable interpretation during a divorce.
When divorce happens close to retirement a family law attorney should always be consulted. Representing oneself during a divorce is risky, especially when a person’s entire retirement funds could be at stake. An experienced attorney can ensure that one’s best interests are represented and fought for during a divorce.