According to a study done at Bowling Green State University, the number of divorces among older individuals has increased enormously in the last few years. The divorce rate for individuals between the ages of 55 and 64 doubled between 1990 and 2012; for those over the age of 65, the rate tripled. Dealing with a divorce later in life can have greater financial implications because people have less time to recover from the loss of assets.
Although people have less time to save for retirement, they can take advantage of catch-up rules, which are available to individuals who are at or over the age of 50. They can contribute more to IRAs and 401ks than younger individuals.
By taking advantage of catch-up rules, people can add $24,000 to 401ks, above the normal limit of $18,000. For a traditional or Roth IRA, individuals can contribute up to $6,500, compared to the normal maximum of $5,500. Along with increasing retirement savings, individuals may also need to consider altering their retirement plans to reflect their changed financial situation.
The outcome of a high asset divorce can have a significant impact on people of any age, but it can have an even larger effect on someone’s financial situation if they are older. The closer an individual is to retirement, the fewer options they will have for saving for retirement; if someone has already retired, they may have no ability to add to their retirement funds. A lawyer can be of assistance to a divorcing client in negotiating a financial settlement that takes this into account.