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How divorce may affect retirement

More people in Texas may be experiencing what is often called "gray divorce," or divorce for adults 50 and older, than in previous generations since experts say divorce in this age group is rising. While this is more common in second marriages and marriages of shorter duration, couples who have been married for decades are divorcing as well. For these couples, the split may be particularly complicated since they may have deeply entwined assets.

People in this situation need to take steps to make sure they enjoy a secure and stable retirement after divorce. They need to be able to make financial decisions without allowing the emotions of the situation to overcome them. This includes making sure they have the necessary paperwork and understand the marital finances. People may want to meet with a financial advisor to talk about their goals and how they can readjust their retirement plans.

People should also keep tax consequences in mind. They may fall into different tax brackets after divorce or have different deductions, and it may be to the advantage of the spouse who earns less to take pretax investments or certain other assets. People need to assess their post-retirement income, including Social Security. It is also important to review life insurance policies as the spouse is usually the beneficiary.

In Texas, most of the property either spouse has acquired since the marriage is usually considered shared marital property since it is a community property state. However, this does not mean people should assume they must split all assets 50/50. It is still possible to negotiate a different type of agreement that is more financially advantageous to both parties. With some assets, such as annuities and some retirement accounts or pensions, it may be easier and less expensive for each person to keep an asset rather than splitting them.

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