How a Florida Divorce Can Impact Your Retirement

Not so long ago, divorce was seen as something pursued by younger couples, while those who were at or past the age of retirement were less likely to end their marriage. These days, however, divorces among older adults is increasingly common. More older Americans are seeking freedom and a fresh start as they begin to enjoy their golden years.

While you should never stay in an unhappy marriage just for financial stability, there are many issues you need to consider before a divorce. One of the most important considerations is how a potential divorce could impact your retirement.

Many couples use retirement assets to fund a divorce

Unless you have an existing prenuptial agreement that guides the asset division process, divorce can be a very expensive process. When you and your spouse don't agree on how to split up the assets you've accrued throughout your life, there's potential for a contentious and protracted court battle. A contentious divorce can quickly become quite expensive.

Many couples end up pulling money out of their savings accounts or even from their retirement fund to pay for their later-in-life divorce. Fighting for the best possible outcome can help ensure your divorce is fair, but it can also diminish the assets available when you're ready to retire in the future.

Expect to split your retirement accounts or pensions

The courts in Florida attempt to make arrangements for asset division that are equitable and fair. That doesn't mean splitting each asset or the total value of your assets 50/50 between spouses. Instead, the courts will look at many factors, such as the length of your marriage, the contribution of each spouse and his or her potential for future income when determining how to split up your marital assets.

Typically, that means that retirement accounts such as your 401k and even employer pensions are subject to division in a divorce. While each divorce is unique, you can expect the courts to allocate half of your retirement account or assets of a comparable value to your spouse, regardless of whose name is on the account.

You may have to adjust your retirement expectations

For some people near retirement age, divorce could mean delaying the start of retirement. Working for a few additional years can help you rebuild your retirement fund after dividing it with your spouse. In other situations, retirement at the same age is still possible if you change your expectations for your retirement.

Instead of living in your marital home, you may need to downsize to a smaller property or a rental unit. In some cases, cohabitating with your children or friends is an option. Similarly, you may not have the liquid capital to travel as much as you had previously planned during retirement. However, you may find that your freedom is well worth these changes to your retirement plans.

Categories: