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Considerations for divorcing baby boomers

Baby boomers in Massachusetts are more likely to get a divorce than their counterparts from 25 years ago, according to the National Center for Family & Marriage Research. For many of these older couples going through divorce, allocation of retirement savings will be a major concern. Generally, retirement accounts are considered marital property. This means that even if one spouse was diligently putting away money and the other was not, the accounts are likely to be split between the two.

When splitting the assets, couples should consider what type of retirement account they have. For example, if the account is a 401k, tax will be taken out at distribution. If the couple has a Roth IRA, tax will be taken out at contribution. Couples need to be sure that they calculate tax when they consider the value of a retirement account. Furthermore, they should also keep in mind their own income tax brackets. If their individual incomes put them in different tax brackets, then one might ultimately receive less than the other from the retirement account unless this difference is taken into consideration.

People should also avoid the temptation to swap their share of a retirement account for real estate. They may be unaware of the value of the retirement account if they are a dependent spouse, or they might not take into account the costs of the house in upkeep and other expenses.

Couples may want to consider divorce mediation as a way of negotiating property division rather than going before a judge. During the process, however, they should be careful about allowing their emotions to influence their decisions. For example, one spouse might agree too quickly to give up their claim on some property while another spouse might become vindictive during property division.

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