As we have noted here before, the divorce rate for people over 50 has been rising. Many people in this age group have a significant amount of money saved for retirement. Without good legal and financial advice, divorced people may see that retirement savings slashed for a variety of reasons.
Women’s retirement savings seems to be particularly impacted by divorce. A recent study showed that divorced women have on average $34,000 less than their male counterparts in retirement savings. However, it’s important for everyone to assess their post-divorce finances to help ensure that they on on-track to meeting their retirement savings goals.
This includes looking at the Social Security benefits that will be due to you. When you claim your benefits can impact how much you will receive throughout the rest of your life. While you can claim them at 62, it’s generally better to wait at least until you reach your full retirement age. You may also be able to collect half of your ex-spouse’s Social Security benefits if you don’t remarry.
It’s necessary to determine how much money you will need during your retirement years. While none of us can know for certain how long we’re going to live, it could be several decades after retirement. Conservatively, you should plan to have eight times your current income saved up to maintain your lifestyle during those years.
If you’re not on track to having the kind of retirement savings you’ll need, it will probably be necessary to cut some expenses or downsize. If this is the case, you’re not alone. The total retirement savings shortfall for all Americans is said to be as high as $14 trillion.
Of course, it’s best to look out for your retirement savings during the divorce proceedings. By having sound legal and financial professionals by your side, you can help ensure that your divorce does not derail your plans for a happy, fulfilling retirement.
Source: Huffington Post, “Preparing for Retirement After a Divorce,” Jeffrey Lewis, Paladin Registry, April. 17, 2015