Divorce Can Derail Your Retirement but Extreme Losses Can Be Avoided
The Great Recession endangered the retirement of thousands of Americans, but experts from the Center for Retirement Research at Boston College recently found that divorce can be just as detrimental. Much of this is due to the splitting of assets and the decrease in income that ensue once proceedings begin (or sometimes even before), but parties can mitigate their risks. Learn more in the following sections, including how a seasoned divorce lawyer can help.
The Retirement Risk Index
Ideally, your retirement should allow you to sustain your current lifestyle. Unfortunately, after the Great Recession, approximately half of all American households were at risk of not meeting that goal. With some 40 percent of all marriages ending in divorce, that number may be increasing on a daily basis - especially since divorce can increase one’s risk of not meeting their retirement goals by 7 percentage points. Thankfully, if parties understand how divorce endangers their retirement, and they learn how to mitigate against the potential issues that may arise along the way, they can decrease their risk of not meeting their retirement goals.
How Divorce Can Endanger Your Retirement
Divorce requires parties to split their assets equitably. Since that typically includes any and all retirement accounts, parties may lose a great deal of the money they had set aside for their future. To make matters worse, households often go from two incomes to just one after a divorce has begun, so parties may find it difficult to replace the money that goes to their spouse. Women who have not worked (or have taken a long hiatus from their jobs to raise children) may have no retirement of their own to speak of, so they may only have what is diverted to them in a divorce settlement. Unfortunately, that amount is rarely enough to sustain their current lifestyle during their golden years. Another concern is that some parties choose to “cash out” their retirement to either fund their divorce or support themselves while proceedings are taking place. While this may seem like a good idea at the time (or perhaps one’s the only option), the long-term implications can be devastating for all involved parties.
Protecting Your Retirement in an Illinois Divorce
While a divorce is likely to impact the amount of money in your retirement account, it does not have to be a life-altering situation. In fact, you can mitigate against the possible risks using some of the following strategies:
- Give up other assets (i.e. the family home) to keep your retirement account intact,
- Delay your retirement so you have more time to add to your retirement account,
- Increase your retirement contributions once the divorce has been finalized,
- Pick up side jobs and dump the money into your retirement account,
- Hire a financial adviser to help you plan for the future, and
- Hire a seasoned divorce lawyer for aggressive protection during your Illinois divorce.
Contact Our Wheaton Divorce Lawyers
At Davi Law Group, LLC, we prioritize the financial future of our clients. No matter what the circumstance, our experienced Wheaton divorce lawyers pursue the most favorable outcome possible. Start by scheduling a confidential, personalized consultation. Call our offices at 630-580-6373 today.