Some people in Florida who get a divorce may suffer financially, and it could extend into retirement. Furthermore, with divorce among older people on the rise, it is increasingly likely that more people may struggle during retirement with less time to recover financially. The Center for Retirement Research at Boston College found that households that have been through a divorce are 7 percent more likely to have to lower their standard of living.
The Tax Cut and Jobs Act adds some additional complications to post-divorce finances that people should be aware of. A white paper by an executive at Prudential Financial Inc. outlines some of these complications. One is that alimony will no longer be taxed for the recipient or tax-deductible for the payer starting in 2019. This could mean that alimony recipients’ reported income is low.
Another consideration is that deductions for state and local taxes will be capped, so keeping the home if property taxes are high might not be a good idea. The child tax credit is also set to change. People should also be aware that they may be able to claim benefits on an ex-spouse’s Social Security retirement benefits if certain conditions are in place.
There may be additional financial considerations in a divorce in which one or both spouses owns a business or in other situations. An attorney may be able to help review a person’s financial circumstances and discuss various scenarios for property division. How close people are to retirement at the time of divorce may also play a part in how property is divided since younger people may have more time to make up retirement savings.