A new trend in divorce statistics may affect New Jersey residents’ retirement plans. A divorce after age 50 usually avoids the issues of child custody and support but may affect retirement savings for both parties, causing older divorcees to re-think their plans for quitting work and forcing them to make lifestyle changes.
Between 1990 and 2010, the divorce rate for those over 50 has doubled, with 25 percent of all divorces affecting those in this age group. Experts believe that longer life spans create different expectations for the future, prompting many over-50s to seriously consider ending unhappy marriages. However, this decision can have serious financial consequences.
Divorced individuals over 50 have an average of $10,000 less in retirement savings than married people, often due to court-ordered splits of 401k accounts and other retirement vehicles. This effect is especially evident when couples have been married for some time prior to the split; a carefully tended retirement account may suddenly become marital property and subject to division, even if only one partner paid into the fund. In extreme cases, an individual’s retirement savings could be cut in half, leaving the person little time to build the account back up prior to project retirement dates.
For those contemplating a later-life divorce, a family law attorney in New Jersey may be able to offer advice for minimizing financial consequences. Those who are divorcing later in life usually have different financial issues than younger couples, and a family law lawyer may be able to help these individuals come to agreements that allow them to keep more of their hard-earned retirement savings.
Source: Huffington Post, “Gray divorce drastically cuts retirement savings by thousands,” Feb. 28, 2013