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Don’t let divorce ruin retirement

By Jennie L. Phipps · Bankrate.com
Thursday, April 17, 2014
Posted: 1 pm ET

Getting a divorce late in life can ruin even the best retirement planning.

"It's hard to divorce emotions from your financial situation, but if you don't, you'll live with the consequences for a long time," says Ann Dowd, vice president of retirement and investing strategies for Fidelity Investments.

Dowd offers several pieces of advice that can contribute to what actress Gwyneth Paltrow has dubbed "conscious uncoupling," the kind of divorce that strives to prevent either half of the couple from being a loser.

  • Assemble the experts. Ask your financial planners or accountants to coordinate their efforts with that of your divorce attorneys to construct a plan that maximizes the likelihood that both of you will be able to live comfortably in retirement.
  • Duplicate all the records. This way you and your heirs won't have to track down information related to the other half of the divorced couple every time someone needs an old tax return or a copy of an annuity or an insurance policy.
  • Understand who owes what. Especially in the nine community property states, you'll be held responsible for debt incurred during the marriage, even though your name isn't on it. "It is important to deal with those debts as part of the divorce arrangement. Debt laws are very detailed and specific, and you have to understand where you are," Dowd says.
  • Think hard about whether you really want to keep the house. "It's a very emotional decision," she says. "But it is really critical to think it through and decide whether you can afford to maintain the house or whether the money you would get from selling it could be used in better ways."
  • Make sure you get your fair share. When you're faced with this kind of emotional pressure, it is easy to be too accommodating. Don't discount the value of the time and effort you spent helping a spouse build a business or get through graduate school.
  • Understand what you'll get from Social Security. Working together and agreeing to delay claiming so both spouses are entitled to as much as possible can provide a financial cushion for both retirements. Of course, to get spousal benefits based on your ex's record, you must have been married for at least 10 years before the divorce.

Because the cost of a single retirement is going to be much higher than the cost of living as a retired couple, it is "all the more important to step back and plan and make sure that you are managing this transition financially," Dowd says.

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7 Comments
Kelly
May 20, 2014 at 6:45 pm

I have been married 15 years. I am retired and my husband (13 years younger) has been out of work the last 6 1/2 years out of the last 7 1/2. We live on my retirement funds only.. Would I have to give him part of the money I worked so hard for?

Joe Truth
May 20, 2014 at 4:29 pm

It appears to me that all of the women responding here are just interested in the money they can get out of their ex-husbands. Here is a thought - GET A JOB!!!

Thank you for your time....

Rita
April 19, 2014 at 4:42 pm

I was married 44 years when my husband divorced me. We had no lawyers involved and had an amicable divorce. Two weeks later he advised me that there was someone else. He had been seeing her for 3 years! He married her last year; almost one year to the date of our divorce.
I find that I need more money to pay the bills and was wondering if I had any recourse. Should I take him back to court and ask for more money or do I just have to live with my Social Security? Thanks Kimberly.

Kimberly
April 19, 2014 at 11:53 am

From what i have read, the retirement plan would have had to have been taken care of in the divorce papers as mine was. The Social Security you would be eligible for only so long as you had been married for 10 years to him previously and have not remarried. Once you remarry, it disqualifies you from collecting on his social security benefits.

margaret thornton
April 19, 2014 at 11:40 am

Am also interested in my ex's retirement plan & if I qualify for any of his social security benefits . I was married for 11 years, helped put him through grad school & received no alimony . I'm considering remarriage in the near future .
Thanks.

Kimberly Matthews
April 19, 2014 at 11:40 am

No, Peggy. Once you remarry, you are ineligible to collect on an ex spouse's social security.

Peggy
April 19, 2014 at 7:18 am

If I was married 18 years to my ex would I be eligible for his pension even though I remarried 20 years later at the age of 57?

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