If you’re getting divorced when you’re close to standard retirement age, your instinct may be to give up other financial assets in order to keep your house. You are trying to limit the amount of change in your life. Your marriage may end, but at least you’ll know you have a place to live. Isn’t that a wise choice?
It may be, as every situation is different, but you do need to be careful. Keeping the house is also a decision that can hurt your retirement plans significantly.
After all, did you have to give up retirement benefits or savings to get the home? Maybe your ex wanted to sell the house and split the money. You wanted to keep it, but you didn’t have cash on hand to buy out your ex. As a compromise, you gave up your right to your spouse’s pension plan.
That gets you the house, but leaves you without income. Can you even retire anymore on the assets you have left?
Plus, the house comes with financial obligations. Even if it is paid off, you now have to pay the insurance, taxes and utilities all on your own. That can sap the savings that you have left. In time, you may even find that you can not afford to keep the house, and you have to sell it anyway. If you do, is the extra money you make in the sale worth less than half of your ex’s pension?
Divorce is not all about finances, but you do need to carefully consider them as you look over your legal options. Be sure you don’t make a simple mistake during your divorce negotiations that does more harm than good.