Nobody plans for divorce. It’s something that happens when a relationship changes, often over time. Not just marital status will change with a divorce, though. Couples plan a future together, which includes assets and wealth.
In most households, duties are divided with one partner “specializing” in something, whether that’s cleaning the kitchen, fixing the hot water heater, sending birthday cards or paying the bills and saving for retirement. Sharing work makes the home run more smoothly but it’s important to make sure everyone is on the same page, whatever the task. Otherwise, divorce leaves one party in the dark about matters like finances.
Planning for a happy future
The simple fact is that happy couples look toward a bright future, not thinking about a retirement plan with an out clause. Gray divorce, a term referring to a divorce when close to retirement age, is on the rise across the country. It presents a new wrinkle in financial planning and retirement savings.
The newly released Personal Financial Planning Trends Survey from the American Institute of Certified Public Accountants looks in-depth at the issues divorce forces on an existing financial plan. It finds that, in most homes, one partner handles the finances. According to the study, just over 75 percent of retirement age divorcees need a better understanding of their personal finances.
Differences by gender
Divorce is a major life event that leaves its mark on your financial position. The study reveals is that many are learning about finances after divorce, but also that behaviors change after divorce. Women are more likely to show positive financial behavior after a divorce, it says, while men are less likely.
Other major factors on the post-divorce retirement fund are an individual’s understanding of the divorce’s impact. Because investments and retirement accounts have strict rules about withdrawals, taxes and transfers, distribution of assets is challenging at divorce.
Understanding your situation
When divorce reshapes your future plans you need to adjust your financial approach. Because finances are so complex, it’s essential to work with an experienced attorney who understands both family law and the financial implications of your situation. Divorce is a major change, but it doesn’t have to leave a negative impact on everything you’ve been saving for.