How divorce affects retirement savings

| Sep 1, 2020 | Family Law |

One unfortunate impact of a New Jersey divorce is that both ex-spouses will find their retirement picture changed after the asset division process. Without careful planning, people may find themselves working longer in order to avoid being poor in their elder years. In the wake of the divorce, both ex-spouses will need to work hard to keep their retirement on track.

Asset division will deplete the size of the retirement accounts. In addition, each former spouse will need to maintain their own household in retirement. The combination of these factors will affect their standard of living in retirement. With lower savings and only one income, an individual may struggle as they near retirement age and find themselves unable to afford to stop working.

As soon as the divorce becomes final, an ex-spouse needs to take immediate action in order to refocus their retirement. They should take the time to learn how the Social Security system works and when they can claim benefits. They also need to prioritize saving for their retirement, even if they find themselves otherwise stretched financially. Finally, they need to invest their retirement accounts smartly in steady investments that are not overly risky. If they do not know much about how to invest, they should seek the help of a professional to teach them the fundamentals of investing.

A family law attorney might point out each of these considerations to their client during the divorce process even though they are not necessarily a financial planner. The attorney may also assist their client by negotiating the divorce agreement that will provide them with a share of the retirement accounts that the couple had saved. With legal counsel, a spouse may be able to strike a better deal when it comes to retirement after divorce.