One of the common goals of marriage is to have someone to save with for a comfortable retirement. However, when a marital union ends in a divorce, that dream can take a detour. Suddenly, each spouse has to take care of their individual future and figure out how to divide their accumulated retirement savings.
For younger couples who have not yet started to save for retirement in earnest, their financial future may not be significantly impacted by a decision to divorce. But partners who divorce farther down the road have much to think about regarding their retirement plans.
Retirement may have to wait
Most of the time, retirement accounts are considered marital property. They are subject to division upon divorce unless a pre or postnuptial agreement protects contributions made during the marriage. If you are divorcing, suppose you have to share your retirement funds with your ex-spouse; the time you need to meet your retirement saving goals may increase somewhat significantly. This may necessitate that you push back retirement to build up your savings.
Moreover, your living expenses in retirement may be higher than you planned, especially if you don’t enter another marital union with an income-earning partner in your lifetime. Thus, you may also need to raise your retirement savings goal to accommodate your financial responsibilities.
Spousal support can derail your retirement savings
Alimony is another aspect of divorce that can affect your retirement plan. If you’re required to pay alimony, it can strain your finances, leaving you with less disposable income to contribute to your retirement accounts.
Therefore, it’s crucial to have a well-thought-out financial plan to manage alimony payments while continuing to save for your retirement. Consulting with a financial advisor can help you navigate this complex aspect of divorce and better ensure you are on track for your retirement goals.
A divorce can significantly impact your retirement plans. Therefore, it’s crucial to be proactive in managing any financial challenges that may arise. By revisiting your retirement savings goals, you can make necessary adjustments to help ensure that you retire comfortably in spite of the divorce.