Couples divorcing near retirement in Arizona face unique concerns. From addressing health and financial needs to navigating the challenges of aging, ending a marriage later in life can feel overwhelming. At Cohen Family Law, we are here to help.
Our practice is dedicated to supporting families through life’s most difficult transitions, including divorce. While divorce near retirement may not involve child custody or child support issues, the combined stresses of transitioning to retirement and dissolving a marriage can complicate financial planning and emotional well-being.
How Divorce Impacts Retirement in Arizona
Divorce later in life brings both emotional and financial challenges. With less time to rebuild financial stability before retirement, the stakes are higher. Here are some critical considerations:
Dividing Marital Property
In Arizona, marital property is divided equally under community property laws. Valuable assets like a family home often become focal points of divorce negotiations. For those nearing retirement, keeping the home may offer benefits, including:
- Real estate property tax exemptions and waivers
- Special treatment of primary residences for public benefits (e.g., Medicaid, SSI)
- Tax advantages, such as mortgage interest deductions and exclusions from gains on sale
- Potential for rental income
- Access to home equity
Deciding whether to keep or sell the home requires careful evaluation. A skilled attorney can help you weigh your options and develop a strategy to protect your interests. Regardless of your decision, the court must approve agreements regarding the division of marital property before finalizing your divorce.
Retirement Plans in a Divorce
Dividing retirement plans becomes more complex as retirement approaches. Assets like 401(k)s and pensions often represent significant portions of marital wealth and are subject to division during divorce.
If you are entitled to a portion of your spouse’s retirement funds, your attorney will need to file a Qualified Domestic Relations Order (QDRO) to ensure compliance with plan requirements. At Cohen Family Law, we assist with:
- Evaluating potential tax liabilities
- Identifying loans against the retirement plan that must be repaid
- Determining eligibility for survivor benefits after divorce
- Assessing hardship withdrawal options
- Reviewing your rights under the plan
Retirement plans play a pivotal role in your financial future. We will ensure your rights are protected and your interests prioritized during the division process.
Social Security Benefits in an Arizona Divorce
Social Security benefits aren’t divided in a divorce, but they are critical to post-divorce financial planning. If your marriage lasted ten years or more, and you are at least 62 years old, you may be eligible to collect benefits based on your ex-spouse’s work record (up to 50 percent of their benefit). This does not reduce your former spouse’s benefits. Additionally, if your ex-spouse passes away, you may be entitled to survivor benefits, which could significantly impact your retirement income.
Because dealing with the Social Security Administration can be complex, it’s essential to work with an attorney who understands how divorce affects Social Security eligibility and benefits.
Life Insurance Policies
Life insurance often becomes a critical factor in divorce settlements, particularly when tied to spousal maintenance or retirement income. You may need to address:
- Whether an existing policy should be transferred or maintained to secure spousal support
- Who will pay the premiums post-divorce
- Whether purchasing a new policy is necessary for financial protection
We can help you evaluate your options and ensure your interests are safeguarded in the divorce agreement.
Health Insurance After Divorce
Health insurance can also present challenges for divorcing couples nearing retirement. If you are covered under your spouse’s employer-sponsored plan, divorce may mean losing that coverage. Options to consider include:
- Continuing coverage under COBRA
- Enrolling in Medicare if you are eligible
- Exploring private health insurance plans
Budgeting for healthcare costs in retirement is vital, and we will guide you in addressing health insurance issues as part of your divorce settlement.
Spousal Maintenance After Retirement
Spousal maintenance agreements may need to account for retirement. For example, when one spouse retires, reduced income might lead to modifications in support obligations. Additionally, factors like retirement savings, Social Security benefits, and pensions play significant roles in determining support.
Our team will advocate for a fair agreement that ensures both parties can maintain financial stability in retirement.
Contact Our Experienced Phoenix Divorce Attorneys
Divorce near retirement can feel daunting, but you don’t have to face it alone. At Cohen Family Law, we are committed to protecting your financial future and helping you transition to this new phase of life with confidence.
If you’re considering divorce, contact us today. We’ll work closely with you to develop a plan that safeguards your interests and supports your goals. Let us help you move forward with peace of mind.
