Your retirement plan should include a budget for a likely divorce, as more people in their 50s and above have decided to dissolve their marriage since the 1990s.
Otherwise known as a gray divorce, this term applies to couples who have been together for more than 20 years. It may affect your retirement fund due to the expensive legal fees associated with divorce proceedings, aside from dividing all your assets with your spouse.
Data from the National Center for Health Statistics and the U.S. Census Bureau showed that 10 couples out of 1,000 people between 50 years and above divorced in 2015.
The divorce rate among senior citizens at least 65 years old and above rose almost thrice since 1990, with six couples out of 1,000 people.
There are several reasons behind a long-term couple’s decision to split, such as discovering that they no longer have something in common. Some empty-nesters also find out that their children were the only thing that kept them together.
Still, a divorce after 2018 will be more expensive and difficult due to certain changes in taxes for alimony payments.
Ken Neumann, New York City’s Center for Mediation and Training director, said that the Tax Cuts and Jobs Act would compel some couples to stay married against their will. By 2019, alimony payments from the spouse paying are no longer subject to tax.
Divorce lawyers here in Suffolk County, NY may explain how this will complicate a divorce settlement. Most lawyers believe that the tax incentive to paying spouses serves as one factor for easier negotiations.
While recipients are not subject to alimony payments taxes, paying spouses may choose to pay a smaller amount due to the new tax code.
Legal counsel should be your priority whether or not you are in the middle of a gray divorce. Would you be able to afford the new system on alimony payments?