The overall divorce rate in America has declined in recent years, but the divorce rate in Ohio and across the country among those aged 50 and over has significantly increased in recent years. Since those divorcing in their 50s and 60s are nearing retirement age it makes sense that divorce could have a significant impact on retirement finances. The impact on happiness and finances can be positive and negative.
Studies have shown that divorcees in their 50s and 60′ are overall a happier group than those who divorce at a younger age. Married retired women are still happier but the increase in older women who are divorced has given rise to the need for new retirement strategies for this group. Financial strategies involving real estate, 401(k) accounts, pensions and Social Security can all be used to build a retirement strategy after divorce.
A spouse who was married for 10 years or more may be entitled to claim Social Security based upon the work record of an ex-spouse. In addition, pensions and 401(k) accounts can be divided between the two people through the use of a Qualified Domestic Relations Order (QDRO). Under that order, funds can be divided between two individuals without incurring any penalties as long as funds are not drawn on before the individual reaches full retirement age. In addition, home equity can be a source of income through an additional mortgage or a reverse mortgage that allows one to take out the equity in cash and then remain in the home without a monthly mortgage payment.
There are many options to consider when entering into divorce negotiations as one is nearing retirement age. Many of the options can have positive or negative impacts on one’s net worth and financial security in retirement. A person facing such a situation in Ohio could benefit from consulting with a professional experienced in dealing with financial issues and divorce.
