Ending a marriage can be emotional and fraught with difficulties at any age, even if both parties agree it is the right decision.Couples over 50 get divorced If so, they often face the additional task of supporting two separate retirement plans, using assets to combine marital nest eggs. If you find yourself in this situation, you can follow these steps to increase your savings to ensure you have enough money for decades of retirement.
1) Use the catch-up contribution rule. If you are over 50 and employed, current tax law allows you to save additional money with a workplace retirement plan or IRA.check IRS.gov Alternatively, contact your financial advisor to find out the annual contribution limit for each account you own.
2) Work another year or two before retiring. For every additional year you spend in the workforce, you can save another year towards your desired retirement. Many Americans say he’s been retired for 20 to 40 years, so the extra money you save can make a big difference to your cost of living.
3) Delay Social Security claims. Claiming Social Security benefits after a divorce can be difficult. Bottom line: It’s worth considering your options and choosing the best billing strategy based on your complete financial situation. If your ex-spouse earns a higher income, you may be eligible for benefits based on your employment records from age 62. In most cases, at least if she’s been married for 10 years and is still single, she’ll be eligible. If you’ve remarried, check your eligibility on the Social Security website (SocialSecurity.gov). If you are claiming benefits based on your ex-spouse’s record, please note the following:
• You can claim benefits even if your ex-spouse is still working. For that, she must have been divorced for at least two years.
• The benefits you receive do not affect the amount your ex-spouse (or current spouse, if remarried) receives.
• You may be eligible for widow benefits even if your ex-spouse dies after the divorce. Check the eligibility requirements on the Social Security website.
4) Save on alimony. Spousal support is more likely to be given when a long-term marriage ends. If alimony was awarded as part of your divorce, consider using it to increase your retirement benefits. Alimony is often given with conditions such as the possibility that payments may stop if you remarry, so keep these in mind when making future plans.
5) Keep investing your retirement money. In a complicated situation, you may be tempted to use your retirement savings to meet your immediate financial needs. However, doing so can jeopardize when and how you retire. Early withdrawals from retirement accounts are an expensive short-term solution that reduces future retirement benefits while incurring tax penalties and fees.
6) Seek advice. Assemble a team of experts who can provide guidance on how to best divide your assets and plan for the future. If you have friends or family who have gone through a divorce, consider asking for referrals. Hire an attorney or mediator who can help you navigate the legal system (note that laws vary from state to state), defend your interests, and update your estate plans Also, talk to your financial and tax advisors for advice on planning your retirement strategy.
The emotional turmoil of a divorce can make it difficult to prioritize your finances, but it’s important to make sound decisions even in the midst of it. Take the time to carefully consider your retirement plans. If you have significant assets or a complex property to split, it’s too risky to rush the process.
Holley Smaldone-Cragg (CMFC) is a financial advisor to Ameriprise Financial in Geneva. She specializes in fee-based financial planning and wealth management strategies and has been in the practice for over 35 years.her website is ameripriseadvisors.com/holley.com.