One of the greatest impacts of any divorce is financial, which is not only felt in the splitting of marital property and changes in insurance premiums, but also in each spouse’s standard of living as the two spouses have to maintain separate living accommodations. For older couples who have combined their assets over the course of a lifetime, the financial impact can be much higher when they decide to split up in their twilight years.
Although the divorce rate has actually gone down in America over the past 25 years, gray divorces among those 50 and older have gone up a staggering 109%. While there are many reasons for this, two of the most significant driving factors are the increasing financial independence of women in this age group, and the availability of healthcare for divorcing spouses who have been dependents on their spouse’s policy.
For Oregon couples facing this life change as they enter retirement, it is important to be aware of the effect that their decision will have on their children or grandchildren as well as their long-term health plans and financial wellbeing. It can help to have an understanding and knowledgeable family law attorney serving the Salem and surrounding communities who can advise you of the best course of action to protect your interests after divorce.
Property division in Oregon
As Oregon is an equitable division state, the court will decide shared assets and debt of the couple based on what the judge determines is equitable, but not necessarily equal. These assets may include the family home along with its equity, bank accounts and other property, annuities, IRA’s, life insurance policies, ‘social Security benefits as well as dividends and brokerage accounts.
The spouses may have difficult decisions to make during division that may involve liquidating assets or long-term care policies and offering up cash for the values of these policies.
Making early withdrawals before the age of 65 on some assets like a 401(k) or annuities of life insurance policies will incur tax penalties. The taxes for early withdrawals of an IRA can end up being as high as 35%, meaning that this asset has a surrender value of a third less than the face value.
The challenges of living separately
For spouses who are used to living together, it can come as quite a shock to find out how expensive living alone can be. They will need to make decisions on paying for home and living expenses, a mortgage or rent, maintaining their lifestyle and covering life insurance. It is best to plan ahead when making this momentous life change.