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3 ways that a Connecticut divorce can alter retirement plans

On Behalf of | Sep 10, 2023 | Divorce |

Many married couples in Connecticut start saving together to fund a comfortable retirement. They may talk about downsizing to a different house or plan specific vacations for after they retire. Yet, dreams of shared adventures may not seem so appealing if the relationship takes a turn for the worse and the spouses start thinking about divorce. Separating lives and finances after years of commitment will inevitably be a challenge for a married couple, and many people worry that their choice to divorce will negatively impact their hopes of retirement.

It is all but inevitable that a divorce will influence someone’s retirement, as it will have an impact on just about every aspect of an individual’s finances. The following are the three most common retirement adjustments people need to account for in a Connecticut divorce.

Reduced retirement savings

Perhaps the biggest and most obvious financial challenge for those divorcing before or during retirement will be the need to divide retirement contributions made during the marriage. People often either need to rework their budgets or change their schedule for retirement so that they can make up for what they must withdraw from the account.

Changing benefits

In theory, the retirement benefits people most depend on in their golden years may relate to their marriage or their spouse’s employment. Both Medicare insurance benefits and Social Security retirement benefits can change after divorce. Dependent spouses often still qualify if they meet certain standards, and their need for benefits generally will not affect the financial circumstances of their spouse after the divorce. However, the application and renewal process can be a bit more challenging when one must establish that the circumstances meet the unique standards for divorced beneficiaries.

New living arrangements

If a married couple intended to age in place for as long as possible, one of them might still benefit from any advance preparation undertaken to prepare the marital home for their golden years. The other spouse will need to create a completely new budget and plan based on their living arrangements after the divorce. Couples that have to support two separate households instead of one shared household may find that their individual standards of living will inevitably drop after divorce because of that new pressure on their finances.

Those who can adjust to the unique challenges that divorce may inspire for their retirement years may be able to preserve their standards of the living and enjoy their golden years more than they would with an unhappy marriage tying them down.