Gray divorces may affect job performance and retirement plans

On Behalf of | Sep 26, 2019 | Uncategorized

Massachusetts may be seeing a growing number of couples who are over the age of 50 and going through a “gray” divorce. Many individuals at this phase of their career life, regardless of how successful they are, may find the stressful process of going through a divorce to be an unwelcome distraction. In addition to affecting retirement plans, divorce-related stress may compromise an individual’s career performance.

As reported by Bloomberg News, the Journal of Financial Economics discovered that the performances of managers and CEOs are harmed during a divorce and may affect the companies they work for. The 2016 study revealed that investment fund managers showed a 4.3% underperformance during the year that they went through a breakup.

C-level divorces may affect a company’s operations or financial standing

When a CEO’s performance suffers due to the distractions of his or her divorce proceedings, a large company may have a number of managerial-level employees or other officers who can lend a helping hand. In a smaller company, such as one with 10 employees or fewer, a distracted CEO may be difficult to cover for.

In some cases, a high-asset divorce may result in an alteration of a CEO’s overall compensation package. Depending on the settlement arrangements, the divorce decree may entitle an ex-spouse to receive his or her portion of a retirement benefit package as a pay-out from a deferred stock-compensation fund or pension plan. A board of directors might then find it in the company’s best interests to devise some alternative form of CEO bonus or salary arrangement that may help protect the value of its stock.

Future retirement plans

High-net-worth couples considering a gray divorce may wish to consider their options for splitting up any retirement funds that they have built during their marriage. As noted in a CNBC article, couples over 50 who are splitting up may wish to look into the costly retirement aspects of a gray divorce such as the possible tax liabilities when transferring an IRA.

In a Massachusetts divorce, the two spouses divide all financial portfolios, properties and valuable assets between themselves in a fair and equitable manner. The court will determine what represents a fair or equitable asset division when the two parties cannot decide on their own.