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Retirement account concerns for divorcing baby boomers

According to a study by the National Center for Family & Marriage Research, people over the age of 50 were twice as likely to get divorced in 2014 as they were in 1990. For people over the age of 65, the likelihood was three times higher. This means that older adults in Texas and throughout the country might be concerned about the security of their retirement accounts when their marriages come to an end.

A survey by the American Academy of Matrimonial Lawyers found that only alimony was more contentious an issue than retirement funds or pensions in a divorce. Generally, even if only one person in the couple has saved for retirement, the court will consider the account the property of both spouses. People should note that while a few retirement accounts, such as Roth IRAs, are taxed at contribution, most of them are taxed at distribution. When considering the value of those accounts, they should keep taxes in mind. Another consideration is tax brackets. A retirement account split equally could ultimately pay less to one spouse if the two are in different tax brackets.

People should avoid the temptation to keep the family home and let the other spouse take the retirement account. The account might be worth more than they realize, and the upkeep of the home could be costly.

The end of a marriage may be a difficult time regardless of how long that couples have been together, so people who are facing a divorce might want to have attorneys to help them manage their emotions and make sound financial decisions. Allowing emotions such as anger or guilt to drive decisions could be costly in both the long and short run. If couples can cooperate and come to a decision outside of court that benefits both of them, this might be the most satisfying outcome.

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