Divorce Effects on Retirement Plans on Long Island
Many Long Island residents find that their divorce has impacted their retirement plans. Many learn the hard way that the division of their assets in their divorce is forcing them to wait years longer than they expected to retire, if they are able to retire at all. This is surely a concern for many, and a good reason to start thinking about protecting your own interests and planning for your own retirement — whether or not you are or will be divorced.
The Cost of Divorce on Long Island
Approximately one in five Americans over the age of 65 is still working, and some have speculated that the divorce rate is one of the factors contributing to this phenomenon. Though divorce rates seem to be trending downward, research continues to suggest that about half of all marriages end in divorce.
The financial repercussions are clear: instead of two incomes to pay a rent or mortgage, and all of the other expenses that go with it, there is only one. In addition, it is often true that one spouse will trade the retirement income for the family residence or some other asset that they need to keep. Splitting these resources between two people can result in one or both former spouses falling behind when it comes to retirement. This is all before taking into account the expense of the divorce itself.
Effect More Severe on Divorced Women
The effect on retirement has a more severe effect on women, likely because women tend to earn lower wages than their male counterparts, in addition to the fact that some decided to stay home and raise their children. In fact, one study of 56,000 women found that women who divorced in their 50s were about 10 percent more likely to be working full time through age 74.
This Boston College study also suggested that divorcing earlier in life may have a lesser effect on divorce, possibly because those who divorce in their 20s and 30s have the ability to rearrange their long term plans for their futures. It is often more difficult to find ways to increase your income at an older age.
As a result of these factors, older individuals face the reality that they must continue to work and find new ways to support themselves.
Take a Financial Inventory Now
To preare, you should first take an honest inventory of your financial situation. This might include a review of your existing assets and whether they can support you through retirement. It might mean that you will need to start contributing to an Independent Retirement Account or other investment account. On the other hand, take a look at how you are spending your money, and determine when and where you can cut corners to save for your future.
Think About Contributing More to Retirement
Find new sources of income, perhaps by investing your money. Speak to an experienced financial advisor who can help you make your long term and short term financial hopes and plans a reality.
Work with Your Former Spouse
Another consideration that may be more possible for some divorcees than others is to discuss these concerns with your former spouse. Perhaps there are certain ways that you can remain a team in order support your children or pay for some of your expenses that will ultimately save you both money in the long run. Some Long Islanders have been successful by saving on things like car insurance, phone bills, or even child care expenses.
Consider Legal Separation Instead
Finally, if you or your spouse will soon become eligible for Medicaid or Social Security, it might be wise to delay the divorce or simply get a legal separation. Social Security offers an increased benefit to married couples, and in addition allows a surviving spouse to collect a higher amount in instances where a deceased spouse had a higher benefit amount. Be careful of losing your health coverage or benefits. Talk to your financial advisor or divorce lawyer to find out of these variables will affect you.
Long Island Divorce Law Firm Can Help with Retirement
The Long Island Divorce Law firm of Hornberger Verbitsky, P.C. can assist you in determining how and whether divorce will affect your retirement, and what you can do to mitigate the consequences. Our family law attorneys are experienced in all aspects of Long Island Divorce and Family Law, and would be pleased to answer your questions regarding your retirement plans. We offer free consultations in our conveniently located Melville, New York office. Contact us today at 631-923-1910 to schedule your free consultation.
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