It’s All About Cash Flow

You’d like to earn 5% at the bank.  Ain’t gonna happen, at least not immediately. Interest rates are stuck near zero, and if you are nearing retirement age and going through a divorce, you need cash flow.  Trading your community property interest in your spouse’s pension and/or other retirement plans for the house may trap you into an asset that you can’t afford.  Houses come with the costs of maintenance, rising property taxes, and the potential for major repairs.  Even worse, there is no guarantee that your house will continue to appreciate in value, or appreciate at all.  Remember the housing implosion?  Instead of taking the house, consider the cash flow you will receive from your community property share of retirement accounts.  If the house has equity, consider selling the house and putting your community property share into an income producing asset.  Having some cash at the ready, even in a low interest rate environment, isn’t a bad idea.  Besides, you’ll probably sleep better at night knowing you have a cash reserve instead of trying to figure out how you are going to fix the roof.  Finally, don’t assume that you will get by on spousal support from your ex.  Why? Because if your ex-spouse is also nearing retirement age, your spousal support may end or be severely reduced.  In California, persons are not required to work beyond age 65 to pay current spousal support obligations.   When nearing retirement age, cash is king.