Mistakes to avoid when divorcing near retirement age

The overall divorce rate decreased in Pennsylvania from 1990 to 2009 according to U.S. census data. However, the national Center for Family and Marriage Research found that the divorce rate for those 50 and older doubled over the same period.

While approximately half of all first marriages fail, the divorce rate increases to 60 percent for second marriages. Second or third marriages often take place later in life and are increasingly complicated.

The largest assets in many Pennsylvania divorces are retirement plans, investment accounts and life insurance policies that build in value over the years. When a divorce occurs closer to retirement, it is important to avoid these two common mistakes.

Failing to change a beneficiary designation

One frequent mistake is failing to change beneficiaries on accounts. It can be a challenge just to remember what you have and locate information on retirement and investment accounts along with insurance policies. Did you leave a 401(k) plan at a prior employer? Do you have an insurance policy through work?

Many accounts require a beneficiary designation when you initially set them up. What some do not realize is this designation trumps a will. If you were married, the beneficiary you listed was probably your wife or husband. When you divorce, it may seem a hassle, but you need to change the beneficiary. Otherwise, an ex-spouse may inherit your life insurance policy or retirement account rather than your children from a second marriage as you intended in a will.

Not maximizing Social Security benefits

Another mistake involves Social Security. Often individuals do not recognize that they may be eligible for Social Security benefits based on the earnings record of an ex-spouse.

If your marriage lasted for at least 10 years and the divorce occurred more than two years ago, you could be entitled to a Social Security divorced spouse benefit. You may claim either your ex-spouse's benefit or your own depending on which is higher. The benefit you receive is one-half your ex-spouse's full retirement benefit.

It is important to realize that you must take the higher of the available benefits between ages 62 and full retirement age. There are also restrictions in what you can earn, if you claim benefits and work during these years.

It is not necessary for you to wait until your former spouse files for Social Security benefits. If you are at least 62 and have been divorced for at least two years, you can make an independent filing decision. If you remarry, you generally cannot claim any benefits on your former spouse's record.

When navigating the divorce process, the counsel of a local attorney is one way to avoid costly mistakes. Having an advocate in your corner can ensure you obtain a fair property settlement that will provide for you during retirement.