The Pew Research Center reports that the divorce rates for people who are at least 50 years old is twice what it was in 1990. Older Illinois residents who decide to get a divorce should be aware of how a divorce can affect their retirement finances.
One type of retirement income that is impacted by divorce is Social Security. Typically, individuals are able to claim the benefits based on the work history of their ex-spouse if they were married for at least a decade, are not presently married and the ex-spouse is at least 62 years old and also able to claim benefits. The benefits of the ex-spouses are not affected when claims are made off of their work history.
Individuals can receive half of their ex-spouse's primary insurance amount when they reach the full retirement age. However, in order this to be beneficial, the amount of the spousal benefit has to exceed that of their own worker's benefit. Unless the person wanting an ex-spouse's primary insurance was still eligible to partake in a restricted filing strategy after reaching full retirement age, the worker's benefit will be paid first.
Retirement accounts are typically some of the most valuable assets have and can become a major point of contention during a divorce. Funds that are in a 401(k), IRA or other type of retirement account are not usually subject to seizure by creditors. In order for the funds to be divided through a divorce, a qualified domestic relations order has to be completed.
A family law attorney may advise older clients how a divorce may impact them financially and may suggest certain settlement terms to pursue to ensure that their post-divorce life is financially secure. Litigation might be used to protect the rights of clients regarding the division of high-value financial assets.