Financial Tips for Remarriage During Retirement After Divorce

Combining two separate lives and financials is not always an easy task, but one that is more complex and more complicated when one or both of the parties have divorced.

As the plans for re-marriage, especially during or near retirement, get underway, the first step should be a prenuptial agreement that is signed well in advance of the marriage. A prenuptial agreement is a financial tool that cannot be utilized for non-financial matters.  can help establish what will be assigned to each family member to inherit. This is important for it to be recognized by the courts. Full disclosure of all assets and liabilities is critical, along with each party having their own attorney.

These steps are important for most states’ courts to uphold the prenuptial agreement. 

1.    Parties should discuss their credit reports, scores and credit histories. Full transparency about their respective approach to debt and credit is important to manage through the somewhat fixed income that is prevalent during retirement. If multiple debts are the issue, you can consolidate your debts to get rid of them. 

2.    Discuss your approach to savings and investing, ensuring that you understand and can balance the amount of risk you are both willing to undertake with the accumulated assets.

3.    Be sure that you are adhering to the retirement distributions of any retirement plans that have been deferred until a later date. 

4.    The divorced spouse can claim on his or her ex’s social security only if not remarried before age 62. Timing of the marriage is important.

Decisions regarding timing of social security should be made as a global decision considering both party’s benefits. Optimize the timing of the start of benefits for each party to maximize the amount of the benefits received.

5.    Create a legal agreement about the children with any former partners.

6.    Revisit your wills and trusts to ensure that former children are considered as you each would prefer and that intestate rules will not apply unless you desire. Ensure that the trusts are aligned with the prenuptial agreement. An estate plan is a fantastic approach to ensure that you are providing for your spouse and managing your children’s inheritance. Later-in-life couples should have separate wills instead of joint ones. Having two wills reduces the possibility of future property distribution issues significantly because life circumstances can change during your marriage.

7.    Update your powers of attorney, such as your medical and health care proxies. Review your beneficiaries on life insurance policies and retirement funds since those are governed by the designation on the accounts not by your will. Review beneficiaries on all investment funds.

8.    Discuss and child support and spousal support that you may have obligations to continue into pre-retirement and retirement years.

9.    Maintain transparency about all assets including real estate, partnerships, 401(k), pension plans, IRAs and other investment and bank accounts. This is crucial for the surviving spouse to know be able to carry on with little transitional difficulties.

10.  If either spouse who is receiving Medicaid benefits marries someone with a more significant income, they risk losing coverage because Medicaid depends primarily on household income.  Check the eligibility regulations in your state to understand how marriage can affect your benefits.

This article does NOT constitute tax or legal advice and is for general information purposes ONLY. Prior to making any decisions, seek legal counsel from a licensed attorney and CPA.