There are approximately 76 million baby boomers in the United States, according to the Population Reference Bureau. As those who were born between 1945 and 1964 near retirement age, they face difficult decisions regarding how to navigate this important life transition. One issue that can complicate matters even further is divorce; the divorce rate for couples over age 50 has doubled since 1990.
Maryland Marital Property Law
If divorcing couples do not have a prenuptial agreement in place, courts may decide how their property and assets will be divided. Maryland is an equitable distribution state, meaning that courts must divide couples’ property fairly, not necessarily according to who holds title to property or who is in current possession of it. Therefore, even if retirement savings accrued during the marriage are held under one spouse’s name, Maryland courts may order the savings to be fairly distributed between the two spouses.
Assets that one spouse acquired before the marriage will generally be exempt from division during divorce. However, funds deposited by both parties into a joint account may be subject to equitable distribution. When determining how to divide assets, courts will typically consider the age of the parties, the length of the marriage and each spouse’s contribution to the marriage both financially and non-financially.
Considerations for Divorcing Couples of Retirement Age
Divorcing couples may find that losing the household income previously provided by the other spouse affects their ability to set aside a portion of their income to a 401(k) or other employer-sponsored plans. One spouse may also find it more difficult to set aside savings for retirement or other expenses if they are required to pay alimony to the other spouse. The struggle of managing living expenses alone, especially after being married for many years, can be stressful.
Spouses who were planning on retiring may have to delay their plans. If retirement savings are divided, one spouse’s portion may not be enough for them to afford full retirement. They must then consider whether they will be able to retire and how retirement will affect their lifestyle.
Planning for Retirement in the Event of Divorce
Taking certain precautions can help older spouses be emotionally and financially prepared to construct a new retirement plan in the event of divorce. Here are a few tips to consider:
- Receiving an equitable share of retirement assets over time may be preferable to taking a lump-sum payout
- Choosing to forego your share of retirement assets in exchange for the family home may not be the most prudent decision
- Social Security spousal benefits (available to those married for at least ten years) may be larger than an individual’s retirement benefit
- A qualified domestic relation order (QDRO) should be obtained for any retirement plans that will be divided between spouses
It is important to speak with qualified professionals such as a certified financial planner, a public accountant and an attorney who can help you navigate the process of divorce and manage the impact it can have on finances including retirement.
Towson Divorce Lawyers at Huesman, Jones & Miles, LLC Help Clients Navigate the Complexities of Divorce
If you are worried about the effect your divorce will have on your retirement, contact a skilled Towson divorce lawyer at Huesman, Jones & Miles, LLC. Our firm is experienced in representing clients in all types of divorce matters throughout Maryland including the areas of Baltimore County, Baltimore, Hunt Valley, Bel Air, Columbia, Westminster, Essex, Towson, Carroll County, Harford County and Howard County. Contact us online or call us at 443-589-0150 today to arrange a confidential consultation.