Although the divorce rate may be decreasing, it’s not so much for those who are 50 and over. Many Massachusetts residents may wonder why there is so much of an increase with the older crowd. This is mostly due to grown children who move out and the opportunity for financial independence. There are mistakes that one should avoid during divorce.
One of the mistakes to be avoided is transferring the ex-spouse’s retirement funds into an IRA. Individuals who fund their IRA with their ex’s retirement account, who then pull money out before the age of 59 1/2, could face an early withdrawal penalty of 10 percent. Spouses could avoid this by having a qualified domestic relations order in their divorce settlements. This gives spouses the opportunity to withdraw money from their ex’s retirement account without worrying about the withdrawal fee.
Another mistake to avoid is maintaining ownership of the home. Some individuals may not be aware that, if they are awarded the house, they could end up in a financial disaster as a result of repairs and property taxes. Another mistake to avoid is overlooking health coverage, and this is especially true for those who may not yet be eligible for Medicare, since health insurance policies are quite expensive.
It is important for individuals to make money for retirement and during retirement. Divorce can be devastating for some, especially for those who have relied on their spouse’s income for many years. By avoiding certain mistakes, Massachusetts spouses can be more prepared when it comes to protecting and increasing their finances.
Source: investopedia.com, “Divorce Over 50: Seven Mistakes to Avoid“, Catherine Fredman, Aug. 4, 2014