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Divorce can have a major impact on retirement

While many North Carolina spouses going through divorce may be aware that the separation process can have an impact on their immediate finances, the effects may actually be more long term. Depending on how close one is to retirement, for example, their preretirement standard of living may not be maintainable.

The Center for Retirement developed the National Retirement Risk Index in 2006 to determine how many working-age households are at risk of being unable to maintain their preretirement standard of living after they stop working. It was shown that approximately half of all American households may not be able to maintain their same standard of living once they stop working. However, those who have gone through a divorce had a greater risk by 7 percent.

Part of the reason why divorced households are at an increased risk is because their commingled assets are divided up. If an ex-spouse is nearing retirement, they might not have many working years left to rebuild their retirement nest egg. Furthermore, the 2019 tax code will eliminate certain deductions associated with children as dependents.

Going through the end of a marriage can be a complex and emotional process. As a result, some people may dig their heels in when it comes to keeping certain marital assets. A family law attorney may provide valuable guidance during the divorce process. In some cases, the attorney could help a client determine if they can really afford the family home or other assets months or even years down the line.