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Family law proceedings may impact retirement plans

Divorce in New Jersey can set people back financially at any age. However, going through this type of family law proceeding at a later point in life can be especially unsettling financially. This is because a late-in-life divorce can derail a retirement that was previously on track.

Divorces typically leave people with greater living expenses, less wealth and lower income. Those who get divorced late in life, unfortunately, do not have as much time to amass additional earnings to replace what they have lost. This is becoming a growing problem, since the divorce rate for couples who are 50 years old and older was twice as high in 2010 as it was in 1990.

A first step toward protecting one's retirement finances is to sell the marital home. Moving to less expensive quarters is wise, since household income typically drops by 23 percent for men and more than 40 percent for women following a divorce after age 50. Recalibrating one's spending is necessary to match this plummet.

It is also wise to strive for the equitable distribution of assets during a late-in-life divorce based on various factors, such as the marriage's length, the parties' earning power and their work records. Divorce mediation or negotiation may enable both parties to achieve a mutually beneficial and satisfactory settlement. If the divorcing individuals cannot agree, however, a New Jersey judge will end up deciding on the matter for them during this type of family law proceeding. An applied understanding of the law may help them to fight for their fair share of assets, while taking into consideration the needs and wishes of the other party.

Source: Time Money, "Don't Let Divorce Derail Your Retirement", Carla Fried, March 3, 2016

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