This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

More Over-Age-50 Divorces, and More to Think About for Divorcees

A final example is pension benefit options. Most pension plans allow married couples to elect to have their pension benefits paid out over their own life and the life of their spouse, ensuring that the pension income will not stop at the death of the pensioner. This option is not available to a recently divorced person who may be caring for someone, such as a parent, sibling, child or other family member who might need the pension income after the death of the pensioner. In this case, taking a lump sum from the pension rather than choosing a payout option may work better for someone recently divorced who knows they will need the availability of these funds beyond their own life.

They are at a disadvantage in terms of taxes, as the tax code favors married people.

Hooks says: The United States uses a graduated income tax system whereby the higher your income the higher the rate of tax on your income. The amount of income subject to higher rates begins at a lower level for single taxpayers than it does for married taxpayers. For example, in 2012, married taxpayers will see their income taxed at 28% once taxable income exceeds $142,701, while single taxpayers will see their income taxed at 28% once taxable income exceeds $85,651. This disparity exists for all tax brackets -- except for the 35% tax bracket, at which both married and single taxpayers pay 35% once their taxable income exceeds $388,351.

What this means is that the recently divorced 50-plus person with taxable income of $150,000 will pay more income tax than the married couple with taxable income of $150,000 -- 19% more.

They are largely ignored by financial professionals.

Hooks says:Recently divorced people over 50 are an under-served market because there is a mistaken belief that certain planning strategies are not appropriate for nonmarried people.

One of the major reasons married people purchase life insurance on their lives is in the event that one spouse were to die prematurely, the proceeds of the life insurance could be used by the surviving spouse for support. There may be a presumption that life insurance is not necessary for the recently divorced 50-plus person because there is no spouse to support. However, people are living longer, and as such the recently divorced 50-plus person may have parents who are still alive that they are supporting. The parents may be negatively impacted if the recently divorced 50-plus person were to die, so the use of life insurance may be just as appropriate.

The same situation can arise with long-term care insurance. The insurance many times is sold to preserve assets for the spouse that does not need care. With no spouse there may be a presumption that there is no need for long-term care insurance. Assets will be sold to pay for care and if nothing is left over, so be it. However, in addition to the financial reasons for long-term care insurance, there may be nonfinancial reasons as well. Long-term care insurance policies provide for care managers to help determine levels of care as well as the plan of care. The presence of insurance can assist someone in being accepted into a facility that they otherwise would not have been able to get into due to their existing assets.

2 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs