If you and your spouse have discussed the possibility of divorce you need to look well into the future. If you are still young you might not be thinking about retirement just yet. But, it’s always best to consider your future. Divorce can play a major role in your retirement and even your retirement age. Divorce could affect the funds you have available in your retirement. Let’s take a look at the effects divorce could have on your retirement security if you do not plan accordingly.
Effect on Retirement Security in East Orange, NJ
The below is a list of ways divorce can have an effect on your retirement security as explained by the Center for Retirement Research:
- Divorce expenses, such as legal fees
- The long-term costs, which will increase, to maintain multiple homes
- Sale of the family home, possibly at a poor time for the market
- Dividing financial assets, including retirement accounts
- The possibility of higher taxes
- Difficulty with saving
- Reduced available credit for both of the former spouses
When you calculate all of these factors together, the financial wealth for a non-divorced household is 30 percent higher than the average wealth financially for a divorced household.
How to Protect Retirement Wealth Following a Divorce in Bloomfield, NJ
Even though this news seems like doom and gloom it’s really not, especially if you take action prior to a divorce.You can protect your retirement wealth after a divorce is finalized. You just need to know your options.
One of the best ways to improve your retirement wealth after a divorce is to remain married for 10 years. If you can reach the 10-year mark for your marriage you will be in better shape than those who get divorced before they’ve been married for 10 years. Why is this important? When you reach 10 years you become eligible to claim benefits from Social Security on your former spouse’s record.
Another option is to negotiate your divorce settlement outside of the court system. This option helps you significantly lower the impact divorce will have on your retirement wealth because you and your spouse are making the decisions, not the judge assigned to your case. This works best for couples who are working towards an amicable divorce and who can come to an agreement on how to divide assets.
It goes without saying that you will need to do a little bit of adjusting to your lifestyle once your divorce is finalized. You cannot live the same lifestyle since you won’t have two incomes. If necessary, you should downsize where you live and the car you drive. Try to start saving more per month than you were as a couple to replenish your retirement accounts.
Make sure you understand your rights when you get divorced. It’s possible that you could be eligible for some of your spouse’s 401(k). You won’t know if you don’t ask your attorney. If so, the funds might not be available right now, but a Qualified Domestic Relations Order (QDRO) can be instituted by the judge, which makes the funds available once you reach retirement.
Contact a Newark Family Law Attorney for a Consultation About Divorce in New Jersey Today
If you are thinking about filing for divorce, or if you have already started the divorce process and are dealing with another matter such as child custody, child support, or division of assets, you need to speak with a qualified attorney. The New Jersey family law attorneys at Nitti & Nitti Attorneys at Law, represent clients throughout the state, including Nutley, Livingston, Orange, and Belleville, NJ. We understand how challenging this time can be for you, which is why we will fight hard to protect your interests, and the interests of your loved ones, throughout the legal process.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.