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The Retirement Ruining Mistakes of Divorce After 50

Divorce is tough at any age. It can be an emotional rollercoaster for everyone involved, and as most people know, it can wreak havoc on your finances as well. For those who divorce over the age of 50, however, the financial consequences can be even more severe – namely because of the effect the financial burdens of divorce can have on your retirement.

Divorce after 50 usually results in some lost income for both parties – which may mean working longer or struggling with investments to ensure you can afford a single retirement.

Based on a recent article from, here are a few of the common mistakes people make when divorcing that can ruin (or at least damage) retirement plans:

Choosing the House

If the housing market over the last several years is any indication, we can’t rely on a home as a viable nest egg. Many people, however, will choose the family home when dividing assets – and they do so for entirely emotional reasons. This choice is often made without consideration for financial responsibilities like property tax, maintenance, and major expenses like furnace or roof replacement. Before you choose your family home (simply because of an emotional attachment), consider all of the factors, and how they will affect your retirement income.

Tax Implications

If you’re dividing assets during a divorce, be aware of the different taxes associated with your various investments. 401(k)s, traditional IRAs, and Roth IRAs are not taxed in the same way, and this can have a significant effect on the amount you pay in taxes over the long-term. Withdrawals from a traditional IRA or 401(k) will be taxed during retirement, where withdrawals from a Roth IRA will not – know the difference to make sure you are dividing assets evenly, or at least not taking on an unnecessary expense.

Rolling Over A Spouse’s Retirement Account

Under certain circumstances, you may be entitled to some of the funds in your ex-spouse’s retirement accounts. If you are over the age of 59 ½ at the time of divorce, you have a one-time opportunity to withdraw from your ex’s 401(k) or 403)(b) – if they are allocated to you through a QDRO – without paying the 10% early withdrawal penalty. Many people make the mistake of rolling these funds directly into an IRA, and face paying penalties if they need to access that money early.

Both divorce and retirement can be significant sources of stress, but with some foresight and careful decision-making, you don’t have to let one negatively affect the other. Keep your financial security in mind if you’re working your way through a divorce, and don’t make mistakes that will stick with your for years to come!

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