Getting a divorce after age 50 can have a big impact on retirement. It can reduce income and force full-time or part-time employment in retirement years. According to statistics, one in every four divorces during the last few years was among the baby boomer generation. Whether these figures are the result of failed marriages or longer life spans isn’t certain, but divorce among this age group will certainly affect retirement lifestyles.

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A late-life divorce requires a strategic plan with the help of a qualified, professional estate planning lawyer to divide up assets and make sure money is dispersed properly. When planning for retirement after a divorce, avoid mistakes that can cause financial damages.

Choose Financial Assets Wisely

Don’t assume that the house is the best asset. Over time, a house will have ongoing and unexpected expenses, and the value could go up or down. A 401(k), IRA or well-diversified savings fund may provide more retirement income. When weighing the house against retirement funds, consider the potential appreciation value of the house and the tax consequences for early retirement and estate taxes.

Consider Tax Consequences

Don’t ignore the tax consequences of retirement plans like 401(k)s, 403(b)s, and IRAs. When money is withdrawn under age 59 1/2 from any of these accounts, the government will take its share in the form of a 10% tax penalty. After-tax savings accounts like Roth IRAs are not taxed. If one spouse receives money from a 401(k) and the other receives money from a Roth IRA, assets are not divided equally, since the Roth IRA provides a bigger payout without tax penalties.

Understand IRA Rollovers

When receiving a spouse’s retirement income in a divorce settlement, be cautious about rolling it over to an IRA account immediately after the divorce. Part of the money may be needed to pay divorce related expenses. According to federal laws, when an individual is under age 59 ½ there’s a one-time opportunity for a divorcing spouse to withdraw money from an ex spouses’s 401(k) or 403(b) accounts without a 10% tax penalty. In addition, those assets must be allocated under the qualified domestic relations order (QDRO). Retirement savings may need to last for 20 to 30 years, so financial advice from a reputable estate planning lawyer can protect assets and prevent potential loss of income.