When a Tennessee couple is considering divorcing, one of the most important aspects of the decision-making process involves the financial ramifications of ending the marriage. For those who are nearing retirement age, this can be an especially difficult decision to make. Most couples plan for retirement under the assumption that they will move through their later years as a unit, helping to support and care for each other. When a divorce occurs, those plans are suddenly shattered, and both spouses have to approach their retirement planning as individuals.
The first step that a divorcing spouse must make is to alter the manner in which he or she envisions retirement. That involves approaching the subject from the position of self-sufficiency, without reliance on assistance from a partner. This can be a frightening prospect, but taking a realistic stance on the matter is the best way to create a solid plan for the years ahead.
Next, spouses should estimate how many years they want to spend in the workforce, and how much income and savings can be amassed during that time. This is a great way to determine if it will be possible to retire as planned, or if it will be necessary to work a few more years to reach one's goal. Be sure to factor in reductions in retirement savings that are likely to occur during property division, and how to best leverage remaining savings to meet those goals.
It is also important to carefully consider which assets to seek in the divorce. Many spouses fight to keep the family home, but that is not always the best choice. In many cases, selling the home and investing the proceeds is a better financial planning move, especially for those who are nearing retirement age. Be sure to understand the tax ramifications of dividing certain assets, and make choices that preserve wealth. With careful planning and clearly defined goals, it is possible for Tennessee residents to move through a divorce without derailing their retirement plans.
Source: Forbes, "Does Divorce Derail Retirement?", Larry Light, July 24, 2017