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Divorce can have impact on retirement

During the process of getting divorced in Montana, how the marital split-up will affect one's retirement typically is not an immediate area of focus. However, is a legitimate concern long term. For this reason, taking steps to protect one's retirement plans is critical during a divorce proceeding.

An Insured Retirement Institute study revealed that nearly a quarter of baby boomers who had gotten divorced said that their divorces caused them to be worse off financially. In addition, 23 percent said that their divorces forced them to have to work longer before retiring. The reason for this is that retirement fund accounts are typically divided between both spouses, which means that each spouse's savings for retirement will decrease substantially.

Another reason divorced individuals may have to delay retirement is that they will end up having one-income households following their divorces. Thus, saving for retirement may be harder than it was for them in the past. In some cases, creating a totally new retirement plan may be necessary, factoring in the decrease of future income as well as the decrease of current savings due to getting divorced.

Splitting retirement money, just like splitting other types of assets, can understandably be tricky. However, if two spouses in Montana can find common ground, they may be able to achieve a divorce settlement that pleases both parties and is mutually beneficial. If not, they will have to go to a judge to resolve their divorce issues, and unfortunately, the judge's decisions may not necessarily be what either or both spouse would have preferred.

Source: madison.com, "Can Divorce Destroy Your Retirement?", Wendy Connick, Oct. 13, 2017

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