Getting a divorce is never easy. There are many financial and legal implications involved besides just emotional issues. However, if you are planning on having a divorce, it is crucial to understand how it might affect your retirement. Knowing about how divorce impacts retirement will help ensure that you are prepared for what is to come. There are certain issues that everyone is aware of regarding a divorce such as child custodial issues and the splitting of assets, but a divorce does not just have a one-time effect, but it affects your entire life. If you want to find out how divorce will impact your retirement, then the following 10 examples of how divorce affects retirement will give you a good idea.
- Requires You to Retire Later
If you had plans to retire early or by the age of 60, you are going to need to put that thought on hold because a divorce has lifelong implications. Since all your assets including financial assets are evenly distributed or as per the prenuptial agreement, you are going to need to retire much later in life. This might come as a shock to you but is a common reality for many men and women. All those financial assets would be evenly distributed between you and your ex-partner or according to the prescribed allocation rate.
- Reduces Lifetime Savings
When you get a divorce, your lifetime savings would also be reduced since savings are a financial asset and they are distributed between you and your ex-spouse. This is why it might be a better idea to donate or give those savings to someone before a divorce so that you might get a hold of them after the divorce. Planning for a divorce is vital if you want to be least affected. Lifetime savings might be exempted from the divorce if it had already been agreed by you and ex-spouse in the prenuptial agreement that lifetime savings would not be distributed. In such a case you might actually get to keep all your lifetime savings.
- You Might Need to Continue Working to Make Child Support Payments
According to the law, you are bound to make child support payments and it is due to this reason that you might need to continue working even if you retire or would have to work more hours to be able to make those payments. It can be grueling to realize that child support payments have to be made monthly but it is a bitter truth you have to swallow if you want a divorce.
- Custodial Issues Would Influence Where You Retire
If there are custodial issues between you and your ex-spouse, then they would influence where you retire. You might be stuck in the same city or state as your spouse due to custodial issues. It is a common reality among divorcees. Until your kids grow older or there is an agreement between you and ex-spouse, you would need to live in the same city or state. This means you would have to put your dream retirement in the Caribbean on hold.
- Minor Children Are Entitled to Social Security
The thing about divorce is that it allows your minor children to become entitled to your social security. This means that when you become entitled to receive social security payments upon retirement, your minor children would also be entitled to it. The payments might need to be distributed evenly among you and your kids.
- Pension Plans Would Also Be Affected
Your minor children are also entitled to your pension plan. They would also be able to receive the pension payments and the court might order you to make your pension payments to them. The account balances of your pension plans might be distributed between you and your spouse. This would lead to a lower balance in your pension plan.
- Division of Assets
As you are probably aware, when it comes to a divorce, the assets are divided between you and your ex-spouse. It means that you would own fewer assets than before when you become divorce. This is why it is important to consider asset allocation before getting married in the first place through a prenuptial agreement. Division of assets can be a hard one for every divorcee but it is almost always the case.
- Payment of Liabilities
Since assets are divided, liabilities are also divided between the spouses. If your spouse earns more than you or even less than he or she might need to help you pay those liabilities or debts off if you had or he had taken the liability or debt during the marriage. It is something that should be discussed between you and your spouse. The payment of liabilities on behalf of your ex-spouse could put your retirement plans on hold.
- Responsibility in Raising Minor Children
Both parents have a responsibility to raise the minor children. It is due to this reason that the responsibilities of raising the children are divided between you and your ex-spouse. It would affect your retirement plans and you would need to think about raising the kids also.
- Traveling Plans
Even if you plan on heading abroad or to a different state for vacations, you will need to inform your spouse and the court first. In most cases, it is advised to have an agreement between you and your ex-partner regarding days of the year when you can travel somewhere out of the city.
Hire a Divorce Attorney
The importance of a divorce attorney cannot be stressed enough. If you want to ensure that you are in the best situation, then you need to hire an experienced and professional divorce attorney such as Columbus Divorce Attorney & Hiring a divorce lawyer as the lawyer will help take care of the entire divorce process. When it comes to a divorce, your best course of action would be to hire a professional divorce attorney who has an expertise in dealing with all issues relating to a divorce such as retirement and custody.