A setback in retirement planning can be a problem for North Carolina residents at any point in life, but as people approaches their retirement years, it can be more difficult to rebound from such a setback. Unfortunately, a divorce can lead to serious retirement implications when it occurs closer to retirement age. If divorce seems inevitable, it is important to act prudently during activities such as negotiating property division.
One of the most expensive assets to keep can be a family home. Because each party in a divorce will likely have to live on one income rather than two, keeping a house with hefty maintenance costs or a high mortgage payment could lead to an inability to save toward retirement. It may make more sense to sell a marital home and downsize so that there is some leeway for building retirement assets.
Retirement accounts often come into play during a divorce, and an individual might be entitled to a portion of the ex-spouse’s pension along with other assets. However, it can be easy to neglect the follow-through needed to ensure that a QRDO is properly handled. It is important to make sure that these matters are completed so that the assets to which one is entitled are actually available when the time for retirement arrives. It is also important to consider the longevity of the marriage, especially if the Social Security benefit under an ex-spouse’s earnings would be greater than one’s personal benefit. A marriage must last for at least 10 years for spousal benefits to be an option after the dissolution.
An individual facing divorce later in life might benefit from the assistance of a financial adviser as well as a divorce lawyer. Even with alternative approaches such as mediation, it is still important to have objective insight about the options available as property division, mutual debt and other financial issues are considered.