{"id":3930,"date":"2014-07-12T07:26:29","date_gmt":"2014-07-12T11:26:29","guid":{"rendered":"https:\/\/kerryhannon.com\/?p=3930"},"modified":"2014-07-12T07:47:03","modified_gmt":"2014-07-12T11:47:03","slug":"pbs-next-avenue-the-big-money-mistake-divorcing-women-make","status":"publish","type":"post","link":"https:\/\/kerryhannon.com\/?p=3930","title":{"rendered":"PBS Next Avenue: The Big Money Mistake Divorcing Women Make"},"content":{"rendered":"
\"next-ave\"<\/a>With our 22nd<\/sup>\u00a0anniversary this week (on the Fourth of July), I\u2019m happily betting that love will keep my husband, Cliff, and I together for many years to come. But for several of my girlfriends \u2014 who, like me, are over 50 \u2014 the past few years have been anything but happily ever after.<\/div>\n
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They\u2019ve divorced, or are on the cusp, and things haven\u2019t been pretty \u2014 lots of would\u2019ve\/could\u2019ve\/should\u2019ves about splitting their shared assets. Probably the biggest mistake they\u2019ve made in their divorce settlements: leaving money on the table from their\u00a0ex\u2019s retirement stash<\/a>.<\/p>\n

I\u2019ll offer some advice on what they\u2019re missing \u2014 and what other divorcing women should do to get the retirement funds they deserve \u2014 in a minute.<\/p>\n

(MORE<\/strong>:\u00a0Divorce Mistakes That Can Derail Retirement<\/a>)<\/p>\n

Read full story on PBS Next Avenue here.<\/a><\/p>\n

The Growth of Gray Divorce\u00a0<\/a><\/strong><\/p>\n

As you have probably heard,\u00a0gray divorce<\/a>\u00a0is\u00a0a thing<\/em>. The\u00a0National Center for Family & Marriage Research<\/a>\u00a0says the divorce rate among adults 50 and older doubled from 1990 to 2010. And in 2010, 11 percent of men and 15 percent of women age 65 to 75 were divorced, according to anew report<\/a>\u00a0from the U.S. Census Bureau. (In 1960, when I was born, just 2 percent of men and 2 percent of women that age were.)<\/p>\n

The Bravo cable TV network just launched\u00a0Untying the Knot<\/a>, a weekly show where lawyer\/mediator Vikki Ziegler helps divorcing couples divvy up their prized possessions. I don\u2019t expect 401(k)s and IRAs to score much screen time, but they should.<\/p>\n

As couples\u00a0consciously uncouple<\/a>\u00a0at older ages, retirement accounts are often significant assets. And, as un-glitzy as they may be, they\u2019re probably worth far more to your future financial security than your memory-laden belongings.<\/p>\n

But many people don\u2019t realize it.<\/p>\n

What Divorcing Couples Wish They Knew<\/strong><\/p>\n

A recent Securian Financial Group\u00a0survey<\/a>\u00a0of 546 people who divorced after 10 years or more of marriage found that going into the divorce, 31 percent did not claim a share of their spouse\u2019s retirement benefits and weren\u2019t aware they could. One fourth of those surveyed said that after the divorce they wish they\u2019d have known more about how to correctly divide these benefits.<\/p>\n

In general, any retirement assets qualifying as marital property can be divvied up in your divorce agreement. However, if a spouse enters the marriage with money already in his or her 401(k),those<\/em>\u00a0funds are considered separate property and aren\u2019t included in the division of assets. (In some states, though, any increase in value during the marriage could be considered marital property.)<\/p>\n

Most places \u2014 except a handful of community property states \u2014 \u00a0use an equitable distribution approach to dividing marital property: Everything acquired during a marriage in either spouse\u2019s name or in both spouses\u2019 names is considered a marital asset subject to division in a settlement agreement, according to the National Endowment for Financial Education.<\/p>\n

Who actually holds the title to property is irrelevant. Three exceptions are assets owned prior to marriage, gifts and inheritances (unless they become commingled in joint accounts).<\/p>\n

You\u2019ll want to work with an ace divorce attorney, of course, to hammer out your Qualified Domestic Relations Order (or QDRO) for your asset split. A QDRO is a legal document, issued by a state court or agency, theoretically to protect both of you from owing taxes when retirement funds are transferred from one to the other.<\/p>\n

6 Tips for Divorcing Women<\/strong><\/p>\n

Now to my advice for women getting a divorce or think they might. Here are six tips to help you get what you deserve for\u00a0your\u00a0<\/em>future retirement:<\/p>\n

1. If you haven\u2019t divorced yet, hire a financial planner soon.<\/strong>\u00a0This money pro can walk you through your various options regarding Social Security and retirement plan money you may be entitled to receive. This can be a huge help when trying to determine what\u2019s rightfully yours and to help you steer through the tax laws. Look for one with the\u00a0Certified Financial Planner<\/a>designation.<\/p>\n

One of my girlfriends also hired a forensic accountant to help her find where her spouse had hidden accounts. Think this sounds excessive? Don\u2019t be na\u00efve. The specialist turned out to be well worth it.<\/p>\n

2. Don\u2019t choose taking the house over retirement assets.<\/strong>\u00a0All my divorced friends fought to hang on to their homes. That\u2019s not too surprising; this mistake is pretty typical.<\/p>\n

In the Securian survey, nearly two-thirds of respondents said their home was their most valuable asset as a couple at the time of divorce. In more than half of the divorces, one spouse kept it \u2014 either through mutual agreement or by buying out the other\u2019s half.<\/p>\n

But the best scenario, according to experts I\u2019ve interviewed, is to sell the home and split the proceeds. The retirement savings stockpiled by your spouse may be substantial and likely to grow in the future. But a home is probably going cost you money to maintain and its future value is less predictable.<\/p>\n

(MORE:\u00a0<\/strong>The Out-of-Court Dividing of Assets After a Divorce<\/a>)<\/p>\n

3. Don\u2019t raid your ex\u2019s retirement funds.<\/strong>\u00a0Experts advise you roll over directly into an IRA any employer-sponsored retirement funds you receive in the settlement rather than cashing out the money.<\/p>\n

By law, however, you\u2019re allowed to withdraw money from your ex\u2019s 401(k) or 403(b) plan one time without incurring the 10 percent early withdrawal tax penalty if you\u2019re under age 59 \u00bd. If you\u2019re buried with legal fees, you may want to pull out a fraction of the retirement funds to pay for them.<\/p>\n

But keep withdrawals to a minimum; you want the money in the retirement funds to continue growing tax-deferred until you truly need it down the road at retirement.<\/p>\n

(MORE:\u00a0<\/strong>Taxes and Divorce: 6 Tips for Women<\/a>)<\/p>\n

4. If your husband has a Roth IRA or Roth 401(k), go for that before his standard 401(k) or traditional IRA.<\/strong>\u00a0With a 401(k) or traditional IRA, you\u2019ll be taxed when you withdraw money in retirement. With a Roth IRA or Roth 401(k), however, the earnings won\u2019t be taxed, since that plan was funded with after-tax dollars.<\/p>\n

5. Negotiate hard for retirement assets over alimony.\u00a0<\/strong>Alimony is taxable and it\u2019s really a short-term plan.<\/p>\n

6. Don\u2019t pass up his Social Security benefit.<\/strong>\u00a0If you\u2019re 62 or older and were married for at least 10 years, you may be eligible to collect as much as half of your\u00a0husband\u2019s Social Security<\/a>retirement or disability benefits, even if he has remarried. (If\u00a0you<\/em>\u00a0remarry, though, you generally cannot collect Social Security benefits on your former spouse’s record unless your later marriage ends by death, divorce or annulment.)<\/p>\n

You may also be able to receive only your ex\u2019s\u00a0Social Security benefits<\/a>\u00a0now and\u00a0delay<\/a>\u00a0receiving your own until a later date, which is a great idea. Social Security benefits are increased by a certain percentage \u2014 8 percent annually for those of us born after 1943 \u2014 if you delay your retirement beyond Full Retirement Age.<\/p>\n

And for those of you who may still have a soft spot for your ex, the amount of Social Security benefits you get has no effect on the amount of benefits he or his current spouse may receive.<\/p>\n

He doesn\u2019t even have to know about it. Ka-Ching.<\/p>\n<\/div>\n

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posted by\u00a0Kerry Hannon<\/a>, July 2, 2014\u00a0More by this author<\/a><\/p>\n

\"Couple<\/p>\n

Kerry Hannon has spent more than 25 years covering personal finance for Forbes, Money, U.S. News & World Report and USA Today. Her website is\u00a0kerryhannon.com<\/a>. Follow her on Twitter\u00a0@kerryhannon<\/a>.<\/p>\n<\/div>\n<\/div>\n

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