Retirement Issues in a Gray Divorce
A divorce later in life results in less time for both people to recover
financially and continue to save for retirement. After a Gray Divorce,
the retirement you planned may not be as comfortable as you intended,
or may even need to be postponed.
Your retirement assets may not be enough for both parties to maintain their
accustomed standard of living.
It is more expensive for two people to live separately than two people
living together. When a couple's retirement assets are divided in
a divorce, each spouse may have to face the decision to either delay retirement,
save more money for retirement, or reduce their standard of living.
Early depletion of retirement funds to
supplement income is a risk.
If a spouse needs an immediate source of income, or is awarded an asset
(such as a home or a business) that costs more to maintain than he/she
can ultimately afford, that person may end up using retirement funds to
make ends meet. This poses a serious risk, however, of not having enough
retirement savings when he or she actually retires. When dividing retirement
assets in a divorce, your attorney should take precautions to minimize
the chance you'll have to deplete your retirement savings early.
It is also important to consider the tax implications of accessing retirement
funds, such as tax penalties and fees incurred for withdrawing retirement
funds prior to age 59 1/2.
Seek the advice of experienced divorce attorneys and financial planners.
If you are an older individual and wish to divorce, you should seek the
advice of a divorce lawyer who understands the effects of dividing retirement
assets relative to you target retirement date. It is also important to
consult with a financial planner to analyze and model the impact a divorce
will have on your income both now and in retirement.