How does divorce affect retirement?
A divorce may make it harder for a person to retire because his or her savings may need to be shared and the expenses may increase.
When Tennessee couples start thinking about a marital dissolution, they have to consider how this separation may affect their future. People who are nearing retirement age may have the future even firmer in their minds. According to Psychology Today, the divorce rate of those over the age of 50 has doubled since 1990. Even so, only about 25% of divorces over the course of a single year involved those over 50. Regardless of age, getting a divorce could change a person’s future retirement.
Ex-spouses may have to share their retirement earnings, which could mean that neither retiree will have access to the full amount of money. Not only do couples going through a marital separation have to split up their retirement assets, such as an IRA or 401(k), but some exes may have to share other retirement benefits, including Social Security or disability. Not all divorceés can receive benefits from their ex-spouse’s retirement fund, but a retiree who fits certain criteria, such as the following, may:
- Is at least 62
- Has not remarried
- Has an ex who can receive disability or Social Security benefits
- Was married for at least 10 years
When a retirement fund has to be split unexpectedly, it could require the benefits earner to work beyond his or her planned retirement age. Thankfully, most people will know if they have to share their benefits before they choose to stop working.
Pushes it back
For most people ending a marriage, their plans have to evolve as their personal relationships change. If a man had been considering retiring within the next two years, for example, he may have to work a bit longer to reach his fundraising goals after a separation. Some single people have a harder time saving money for the future because they have to spend the same amount of money on living expenses with less disposable income.
A person nearing retirement may think that tackling old age on his or her own will be less expensive than going through retirement with an ex-spouse. However, the truth is that it can be more expensive for a single person to be retired than a couple. Combine this with the fact that exes may have to split their retirement funds and it quickly becomes clear that a divorce could lead to a more modest retirement.
No matter the age of ex-spouses in Tennessee, there is a chance that a divorce could affect their impending divorce. Whether a couple has a large chunk of shared retirement savings or a smaller nest egg, it may be beneficial to work with an attorney who is familiar with divorce proceedings.