Individuals of any age can end up taking a bit of an income hit after a divorce. While such an income drop can be concerning for any divorcing individual, it can be of particular concern for older individuals. Due to retirement, the potential of facing high medical expenses in the not-too-distant future and other factors, older divorcing individuals can have considerably fewer options for building income levels back up after a divorce.
So, having income-generating assets can be important for an individual 50 or older after a divorce. It can be vital for older divorcing individuals to keep this in mind when deciding what to do when it comes to divorce property division.
For one, it can be a key thing to factor in decisions regarding the marital home. There are many emotional reasons why an older individual might want to keep their marital home after a divorce. However, this might, depending on the circumstances, not be in their financial best interest.
A home ties up a rather large amount of value in a relatively illiquid form, meaning a form it is hard to quickly convert into currency at value. Also, houses, particularly large ones, can have a wide range of expenses attached to them. So, in a time of life when income-generating assets and ready availability of funds can be important, such as old age, having a lot of one’s net worth tied up in a home could, under certain circumstances, be problematic.
Thus, depending on the situation, getting possession of a marital home may not be as much in an older divorcing individual’s best financial interest as getting possession of assets that have high income-generating potential or could be quickly converted into income-generating assets. Also, in some circumstances, it may make more sense for an older divorcing couple to have a home sold and the proceeds divided (with each person then moving into a smaller residence) rather than having one of them keep the home after the divorce.
Of course, what the best course of action would be regarding a marital home and other assets in a divorce heavily depends on the situation. Divorce attorneys can help divorcing individuals of all ages, including older divorcing individuals, with developing a strategy and approach for property division negotiations/proceedings well-suited for their particular situation and needs.
Source: Money, “Don’t Let Divorce Derail Your Retirement,” Carla Fried, March 3, 2016