Filing for divorce is a big decision. It can change an individual’s entire life and future.
The changes a divorce can bring might be stressful at first, but in many cases, it can also bring many positives as individuals begin the new chapter of their life and look forward to the future. Even so, it is critical to note that a divorce can have a long-lasting impact on one’s life – specifically, one’s retirement.
Remember: Retirement is divided in a divorce
North Carolina law requires divorcing spouses to divide all of their marital property equitably between them. This includes tangible assets, such as:
- The family home;
- Other real property;
- Vehicles; and
- Furniture.
However, it also includes other assets, such as bank accounts, credit card accounts – and even one’s retirement savings. This is one thing that many people do not consider when they pursue a divorce.
Any retirement savings accrued during the marriage are considered marital property, which both spouses have a right to. Even though the account might be in one spouse’s name, they are subject to division in a divorce.
In many cases, one’s retirement is one of the most valuable assets individuals own in their lifetime. Dividing these assets can not only be complex, but it can also have a considerable impact on one’s original plans for retirement. Many people find that they have to work longer than expected, and retire later to make up for the assets.
Dividing retirement has an even larger impact in elder divorce
There is no doubt that the property division process can have an impact on one’s retirement savings. However, this impact becomes particularly larger for couples who divorce closer to their age of retirement – and this is becoming all too common.
In just the last few decades, the rate of divorce for individuals over 50 increased by 109%. Older individuals who pursue a divorce could face significant financial stress since they often:
- Have less time to earn more and build up their savings again before retirement; and
- Must adjust to living on a new budget on one income after property division.
That is why it is critical for individuals seeking a divorce to take great care and plan for their financial future before moving forward with a divorce – regardless of their age.