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According to a recent article by MarketWatch, divorce can have a greater impact on your financial life than on your personal life because most married couples simply do not plan financially for divorce. No matter how well you think you and your spouse have managed your budget and your money during your marriage, it is likely that your investment strategy was not based on a divorce. Your failure to plan ahead could end up substantially setting you back after your dissolution of marriage preceding has concluded.
Retirement After Divorce?
One of the primary issues for husbands and wives is the current position of their retirement accounts. Fidelity Investments suggest, “employees need eight times their ending salary to meet basic retirement income needs.” How does an individual realistically meet this goal? Even for high earners, it is recommended a worker should have about one times his or her salary saved by age 35, three times his or her salary saved by age 45, and five times their annual salary saved by age 55.
What about people in their 50’s and 60’s who are on the right pace to retire comfortably, saving substantially more than recommended, only to realize that their marriage is ending in divorce? Notwithstanding the cost of the actual divorce, those nearing retirement age must think about the expenses involved in beginning a new, single lifestyle (i.e., relocating, refinancing a new car, mortgage down payments, opening new accounts, etc). Additionally, it is likely numerous challenges will arise when it comes to dissolving combined assets and liabilities without making mistakes that could lead to tax penalties.
Rebuilding Savings After Your Divorce
When a divorce is finalized, it is often difficult to focus immediately on building up your savings if you must immediately turn your attention to other pressing expenses. The need to rebuild while also planning for retirement can mean working longer than you initially planned.
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In short, this process can be very difficult. If you would like to set up a consultation to speak with an experienced Florida family attorney who can help you prepare, as well as, vigorously advocate for you during this difficult process, please call (904)-353-7733.
Cite: MarketWatch Article; April 3, 2015
http://www.marketwatch.com/story/picking-up-the-financial-pieces-after-a-divorce-2015-04-03
Fidelity Investments 2012 data collection
http://www.reuters.com/article/2012/04/18/idUS123824+18-Apr-2012+BW20120418