When you think of retirement, you probably imagine more leisure time to enjoy your hobbies, visit family and travel. Most people don’t consider divorce to be part of their retirement plans.
However, a growing number of older adults are choosing to start a new chapter on their own. But will they have the funds they need for a comfortable retirement?
Financial fallout?
Divorce can be expensive, regardless of the stage of life. But for those nearing retirement, there are additional concerns. One of the most significant financial impacts is the division of property. For most couples, a substantial portion of their assets is invested in retirement accounts, including 401(k)s, pensions and IRAs. Dividing these can make a large dent in those savings.
Another factor is that a shared household is financially efficient. Costs such as rent or mortgage, utilities, and other expenses can strain the budget of a single-income household. Additionally, as people age, they may develop more health issues. If one spouse carries health insurance, the uninsured spouse will incur the additional expense of paying for coverage.
The financial picture isn’t all doom and gloom, and a gray divorce doesn’t have to derail your retirement plans completely. Some strategies can help ensure future stability:
- After dividing assets, take stock of what remains in your retirement accounts and compare it to your original goals. You may need to delay retirement for a few years to rebuild your savings.
- Explore different housing options. The family home may have emotional ties, but maintaining it could drain your resources. Purchasing a smaller, more affordable home or renting can free up funds for other expenses.
- Create a budget and stick to it. Simplifying your life may bring you more pleasure while also reducing your spending.
Divorcing later in life can be complex, especially when significant assets are involved. Discussing your situation with a legal representative can help ensure you receive what is rightfully yours.
