Researchers at the Center for Retirement Research published a study in 2018 that captures how impactful a divorce can be on your finances as you near retirement.
One of the primary takeaways that the study’s authors made is that the later a spouse divorces as they near retirement, the least likely it is that they’ll be able to fund their current standard of living once they leave their job.
How the study’s authors arrived at their assessment
Divorcing spouses aren’t often prepared for the legal costs associated with pursuing a divorce. These can mount up if the couple has many complex assets to divide up or there’s litigation.
Couples also fail to consider the newfound financial responsibilities that they’ll have to take on as they go their separate ways. One of the biggest of those is moving out of the marital home into your separate places. Your financial obligations may increase significantly if you have to foot the bill for your mortgage or rent, utilities, property taxes and insurance all by yourself instead of with your spouse’s help.
Unexpected costs such as legal fees or a loss of financial support in a divorce can force you to tap into your retirement fund. The National Retirement Risk Index (NRRI) tracks how many Americans are at risk of tapping into the funds contained in their retirement accounts to cover their everyday expenses. They label anyone who has a retirement account that drops by at least 10% as at risk of being unable to maintain their accustomed lifestyle. At least 53% of divorced Americans qualified as at-risk in 2010. The percentage decreased to 50% by 2016.
What you can do to minimize the financial impact of your divorce
Many spouses know that their divorce is going to come with some headaches and financial losses. Many aren’t aware of how costly things are nowadays unless they’re intimately involved in their household’s finances, though. They also often don’t understand how Florida’s equitable distribution laws may impact the division of their individual property, such as retirement accounts.
A divorce attorney can help you navigate discussions about the division of you and your spouse’s marital assets so that it has as minimal of an impact as possible on the Florida lifestyle that you aspired to have here in Melbourne.