‘Divorce gap’ can have an impact on income, as well as on retirement planning.
In my prior life, a large part of my practice was as a divorce lawyer. I was involved with may stress filled conversations about the marital break-up.
While the ending of a marriage is an emotionally devastating event for most people who experience divorce, it is also very much the ending of a business relationship. Intermingled efforts at saving, raising children and maintaining a home deserve the eyes of a third party who is knowledgeable about assets, alternative ways to negotiate, and what will likely happen in Court if you cannot agree.
If you or a loved one is going through this process, seeing proper legal counsel about your rights, particularly as to retirement plans accumulated during the marriage, is critical. A competent divorce lawyer can be well worth their cost.
A study from the Center for Retirement Research at Boston College found that divorced women historically are better off than single, never married women, because of the assets they have accumulated before divorce, primarily home ownership. However, that can have a negative impact on retirement, according to Money in “This is The Single Best Way Divorced Women Can Secure a Successful Retirement.”
Many divorce lawyers and financial advisors say that keeping the house after divorce, isn’t always the best move. Many newly-single women find they don’t have the resources to keep up with mortgage payments, maintain the property, pay taxes and deal with unexpected crises.
One advisor says she’s concerned that these new numbers will lead to women who can’t necessarily afford to maintain a home to hang on to their homes.
However, a researcher involved in the study maintains that while the study mentions homeownership, there’s a bigger point being made. Married women who divorce benefit from receiving a share of marital assets. Single, never-married women do not and must rely solely on themselves for saving and accumulating assets that can be used to finance their retirement.
A critical fact that women who are divorced must do: whatever assets they get in the divorce settlement, commit to keeping those assets intact for retirement. It’s easier to do this with a house. However, it’s tempting to dip into assets that are intended for retirement.
Many of our clients put plans in place to protect the asset they leave to children from divorce.
An estate planning attorney can advise you in creating an estate plan that meets your unique circumstances, including retirement planning.
Reference: Money (Aug. 10, 2018) “This is The Single Best Way Divorced Women Can Secure a Successful Retirement”