Older California couples who are getting a divorce may face a number of financial challenges. Because they have fewer years left until retirement, they may have less ability to make up for the financial losses that the end of a marriage can produce. Since the 1990s, the divorce rate for people 50 and older has doubled despite going down for other age groups. Divorces can be costly even when they are relatively amicable, and some couples may spend thousands and thousands of dollars wrangling over assets.
Certain financial errors in property division can exacerbate this financial burden. For example, withdrawals from 401(k)s and non-Roth IRAs are taxable, and this should be taken into account when weighing the value of these accounts. Liquidating a brokerage account may result in a significant capital gains tax.
People may also make decisions based on emotion rather than practicalities. Keeping the home can be such a decision, but a home can be difficult to maintain on a single income. In one case, a person decided to exchange all other marital assets for the home. Unfortunately, she ran into health problems, could no longer work and lost the home. Selling the home presents challenges as well. The house might not be worth as much as anticipated, and upgrades and inspections that are necessary prior to selling all cost money.
People who are preparing to go through a divorce might want to think about their priorities before they enter negotiations. For example, a parent might want to keep a home to help maintain stability for their children during the divorce, but it is important to understand the financial burden in doing so. Another person might prioritize keeping as much of a retirement account as possible or holding onto a valuable collection.