Retirement and Divorce: How Preparation Can Mitigate the Potential Consequences

 Posted on November 01, 2019 in Property Division

Married couples dream of retiring and enjoying their golden years together, but with the high rate of divorce these days, this dream is not always realized. In fact, divorce in retirement has become extremely common - so much so that it has even developed a name. Dubbed the gray divorce, retirement in your senior years can significantly impact your future. Learn how to prepare and mitigate the effects with help from the following sections.

How Divorce Can Negatively Impact Your Retirement

Divorce can be a costly endeavor, in and of itself, but its effect is often amplified when it occurs during or shortly before retirement. Much of this can be attributed to the division of assets and the lack of earning years left for the divorcing parties. Younger couples have time to rebuild their retirement; this may not be true for those approaching retirement or currently retired. Yet, like all other divorcing couples, their assets must be equitably distributed between the divorcing parties.

Mitigating the Consequences of Divorce During Retirement

Parties divorcing during or shortly before their retirement can mitigate the potential financial consequences with effective planning and preparation. The first step is to take an inventory of one’s income and expenses. Account for things like housing, utilities, food, and personal items. Then consider if any expenses can be cut, such as subscription services or luxury items. Next, determine if there may be any untapped resources. An example might be your spouse’s social security, which you may be eligible to collect, even after your divorce.

With s clear understanding of what you are expected to earn and spend, parties should consider whether they can live a comfortable life on their anticipated resources. If not, then it may be prudent to consider some alternatives, such as taking on a second job until retirement, reducing expenses even further so that more money can be saved, or simply working longer to increase the amount of social security to be collected by the party.

An attorney can also help you examine your options and protect any assets that may be owed to you. For example, they can help you with filing a Qualified Domestic Relations Order (QDRO) to protect you from tax consequences when dividing you or your spouse’s 401K or retirement pension plan. Your lawyer can also help you examine and pursue other financial resources that may be available to you, such as spousal support for those who are no longer capable of working or had given up their career to care for children or an ill spouse.

Contact Our Wheaton Divorce Lawyers

Divorce does not have to wreck your retirement. Contact Davi Law Group, LLC, where your financial stability is a top priority. Our seasoned DuPage County divorce lawyers will work hard to protect your interests. Call 630-657-5052 and schedule a personalized consultation to get started.

Source:

https://www.forbes.com/sites/frawleypollock/2019/11/02/how-divorce-can-impact-your-retirement-plans/#29f997a2166b