Depending on your situation at the time that you file, divorce can have lasting financial implications. Not only will you incur expenses in the process of ending your marriage, but you will also have to adjust to reduce overall assets and income when you separate your financial future from that of your spouse.
It can take those at the height of their career several years to fully recover from the financial effects of a divorce. If you are close to or past the age of retirement, there is no question that divorce proceedings will impact your retirement plans.
You will have fewer savings and possibly more expenses
When you initially plan for retirement, you were most likely looking at sharing a living space and many resources with your spouse. Now, your retirement assets will have to cover your living expenses and your spouse’s separate living expenses during retirement.
Simply put, the same amount of money will have to cover more expenses while simultaneously being split into two separate funds. That could mean that the seven-figure retirement plan you spent your entire professional life developing is now a six-figure retirement account which will have drastic implications for your budget.
You may need to get creative to recover from the impact of divorce
Perhaps you’ve always dreamed of cruising down Route 66 to celebrate your retirement, or maybe you just want to spend every major holiday with your children, all of whom live in different major cities with their families. Divorce could mean that you will have to reduce your travel expectations.
In fact, you may not be ready to retire at the same time you intended. Working a few extra years, even as a part-time employee, could help you build those retirement savings back up to a point where they are sustainable.
Getting creative about alternate sources of income, like renting out your house and living in the mother-in-law apartment above the garage could be another option. Others may find that living with their children is a good solution, as they can offer services like childcare or cooking in lieu of paying rent.
Your age, your health, your standard of living and your expectations are all going to influence what happens when you divorce close to retirement age. Planning for the impact of divorce early on in the process can help you recover and still enjoy your golden years.