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Divorce can hurt your retirement

Divorces don’t have to be contentious, but often they involve sensitive issues that both sides feel passionately about. One such issue is how divorce makes an impact on retirement plans, and important changes to tax law make this a larger problem than ever before.

Overall, roughly half of the country will see a decrease in standard of living in retirement, and a divorce increases those chances. With coming updates to the way taxation counts alimony payments, that low readiness is an even greater challenge for those getting divorced later in life.

The trouble of “grey divorce”

People who divorce as they approach retirement are at risk because they are often in long lasting marriages. The longer the marriage, the higher the chance that all aspects of their financial lives have become mixed together. In divorce, that fact is addressed in two ways:

  • Equitable property division: Property in Florida is divided equitably taking into account income, fault and medical status. This division extends to retirement assets. If the higher-earning spouse has a large retirement account, a judge will issue a qualified domestic relations order that divides the account accordingly.
  • Alimony: Under the previous tax law, alimony payments were deductible from an individual’s tax return and allowed for significant tax savings and the possibility for higher alimony payment amounts. Now, that the law has ended those savings, people who stand to receive after a divorce face a tougher time getting the proper payments.

These issues are contentious and can make ending a marriage later in life a complex issue and financial burden.

There is hope if you get the right help

Divorce at any point is a struggle, but you shouldn’t feel stuck just because of possible financial difficulties. A lawyer experienced in Florida family law can help you come out of your divorce in the best possible position.

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