The effect of a divorce on retirement

At some point during their marriage, a Massachusetts couple may begin to plan for their retirement. However, there are cases where couples may decide to get a divorce, which could cause major problems for both parties if they are nearing the age of retirement or have already retired. While this can be a setback, there are several steps that ex-couples can take to ensure their retirement is not completely derailed.

One piece of advice that is often given is for both parties to hire their own financial professional when they are contemplating ending their marriage. A financial adviser may assist with retirement details, future investments and taxes. Both parties should also review their existing retirement assets, and a financial professional may help a client understand how accounts may grow under certain scenarios. When Social Security retirement benefits are considered, many experts suggest that if possible people should put off beginning to draw them down until they reach the age of 70.

Finally, making a new budget that takes a divorced person’s new financial limitations into account is extremely important. It is recommended that people track how they are spending their money so that they can better determine where to cut spending in order to save for retirement. Additionally, keeping up with retirement planning after the divorce has been finalized will help the person stay on track.

In a high net-worth divorce, an attorney may help a client seek a fair share of the couple’s property. Retirement plans often are a significant asset, and in some cases it may be advisable to negotiate an agreement under which one party relinquishes his or her share of such a plan in exchange for property that is more liquid at the time.

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