Divorce among older people is on the rise, but it also poses unique challenges. For some older California couples, there could be complications when it comes to dividing property and dealing with health care. There could also be some fallout for adult children.
Couples who have saved for retirement with the assumption that they will be using the money to support one household may struggle to use the same amount across two. Usually, the only portion of retirement savings that will not be split is anything that was accumulated before the marriage. When a couple has been together for a long time, it may be difficult to ascertain which property was acquired before the marriage versus what was obtained afterward.
If a person has health insurance through his or her spouse's employment, that individual could lose access to health insurance as soon as the divorce is finalized. That could be catastrophic for people heading into their 60s and older, when they are more likely to deal with health problems. Spouses may also be removed as beneficiaries on life insurance policies.
Finally, divorce among older couples can have a significant impact on their adult children. This effect may be emotional, but it may be financial as well since adult children may also need to provide financial support. Like minor children, adult children might feel pressure to take sides in the divorce.
People should also be aware of how divorce may affect their taxes. For example, it may be necessary to roll distributions from some types of retirement accounts into IRAs to avoid taxes. The sale of some types of property could also incur taxes. On the other hand, new tax laws mean that if one person must pay alimony to the other, it is no longer tax deductible or tax payable. In some cases, it may be less costly for each person to take certain assets than to split all of them.