One of the more common concerns individuals have about divorce is how it might impact their financial futures. Spouses who have reached the peaks of their careers, have a family business or are nearing retirement tend to find themselves unable to think of much else.
Researchers at Boston College recently set out to gain a better understanding of just how much a person’s divorce impacts their ability to retire. The Center for Retirement Research staff determined that the closer a spouse is to retiring, the more significant impact their divorce will likely have on their financial future. The researchers also discovered that these financial woes might push back their retirement plans.
How does a later-in-life divorce impact a spouse’s finances?
The Boston College researchers crunched National Retirement Risk Index data, which led them to determine that even if they remain married, retirees can only afford 50% of what they could while still employed. Study authors also determined that divorce decreases retirees’ financial buying power by 7%.
Study authors also discovered that financial crises, such as the 2008 recession, coupled with divorce, can adversely impact a retiree’s ability to afford their expenses by as much as 2% additional.
Why does divorce so significantly impacts retirees’ buying power?
Retirees often work tirelessly for years, building up their salaries and retirement nest egg before they’re ultimately able to walk away from their jobs. By then, they’ve generally only accumulated enough in their 401(k)s or investment accounts to continue living a comfortable lifestyle with little left over for luxuries.
As you might imagine, a divorce can delay retirement if significant funds are siphoned away by a spouse during property division settlements. You owe it to yourself to not let the hard work you put in to build your nest egg get squandered. It will be necessary for you to engage in some potentially pretty aggressive negotiation if you wish to protect your financial interests as you divorce.