Divorce stalls retirement and alimony tax deductions end

| Jul 6, 2018 | Firm News

A study published late last month by Boston College’s Center for Retirement Research (CRR) shows that many divorcees may have to buckle up and spend an extra few years in the job market or otherwise plan to live on a lot less money in the future.

Currently, the CRR’s National Retirement Risk Index shows that at least half of all Americans have less retirement savings than is projected to be necessary to live on for the rest of their lives. Somewhere around 57 percent of recently divorced individuals have too little saved up to live on in the future.

Certain factors that impact divorcees more so than other prospective retirees include having to pay for legal fees, having to handle the costs of living expenses on their own and losing access to assets when split up in a divorce.

Come the start of 2019, newly divorced spouses ordered to pay alimony will also face a potential added financial burden. On January 1, a new Republican-backed tax bill will go into effect making it where alimony payers cannot take tax deductions for their payments as they were once able to do. While many legal analysts argue that this will likely result in lower spousal support obligations being ordered, that remains to be seen.

Parents will also be impacted by this new tax code as they’ll no longer be eligible to take deductions for their kids. Instead, they’ll be eligible to receive a credit for them. Navigating which parent will take them is sure to be difficult for many couples.

The older that we get, the more likely it is that most of us have amassed a significant savings. Getting divorced later in life can cause many of us to lose what we’d hoped to be able to live on in the future. Having to cover added expenses such as spousal support can make things even more difficult. That’s why it’s important to have a Kissimmee alimony attorney on hand to help determine and negotiate a proper award of alimony.

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