You’ve worked hard for the better part of your life, and you’ve finally made it to retirement. Now is the time to enjoy the fruits of your labor. As we all know, our perspectives can change, and unforeseen events will undoubtedly unfold, for better or for worse.
Perhaps you’re now considering getting a divorce, or you’ve been asked for one. Divorce in retirement can be overwhelming; the idea of not being able to enjoy your retirement the way you had planned for is worrisome. It often creates financial uncertainty on top of the emotional burden you may bear.
The good news is, there very well may be a way to turn this fork in the road into something that works out well for both divorcing parties. A 50/50 split is not always the best choice, and likely won’t be in a situation where one or more spouses are retired. You can read up on whether or not a 50/50 split is an overall wise choice in this article.
For starters, it’s best to answer a few important questions about your situation.
Evaluate Your Cash Flow
What are your major sources of income and how much are they bringing in each month?
It should be relieving to know that your social security won’t be impacted. In fact, if you’ve been married for longer than ten years, you will be able to collect your benefit, or half of your spouse’s benefit – whichever is larger. And, this won’t negatively impact your spouse’s benefit.
Pension or Investment Incomes
If you have a pension, it may be divided between the two divorcing parties. Alternatively, you may need to give them another investment account that is equal to your pension’s value.
If you don’t have a pension, you may have to split your retirement accounts, meaning you would be entitled to half of what you were drawing before the divorce. You can learn more about Pension Valuations here.
Debts and Liabilities
Are there loans or mortgages that you are responsible for? What outstanding credit card debt do you have? It’s worth noting that you will likely be responsible for half of all debts the marriage is carrying.
If this is the case, consider your monthly expenses and what you can do without. You can also consider working again (part time or full time). Also, consider your current investment strategy. Could it be restructured or re-employed to better fit your lifestyle and needs after divorce?
Evaluate Your Assets
What do you own, both partially and outright? Some examples are:
- Homes, Real Estate
- Antiques / Collectibles / Art
Depending on what your assets are, you may want to seek a valuation. Also, consider liquidating some assets if they can ease the potential burden of monthly bills that didn’t exist prior to the divorce, or if they can offset any decrease in monthly income.
You may find you have reached the limits of your attorney’s financial expertise as it pertains to divorce. If this is the case, seek someone who can effectively advocate for you by reviewing your financial situation and recommending a creative solution that will yield an optimal outcome – based on their financial background and years of divorce experience.
Call us at 877-471-4654 to learn more about how a Certified Divorce Financial Analyst® can work with you and/or your attorney in order to create the best possible outcome from your divorce. You can also read up on whether or not this is the right solution for you in this article.