Most people are aware of the immediate and short-term financial impact of getting a divorce. Each of them will have to adapt to living on a single income, thus creating the need for a new budget and a creation of new spending habits. However, individuals facing a divorce in North Carolina should also consider the impact that a divorce may have on their ability to retire.
Your retirement account balance is impacted by your divorce
The National Institute for Retirement Security, or NIRS, published a study that illustrates how much more money married people have in their retirement account than those who have divorced. According to their study, married men have an average of $84,874 in their retirement account while married women have $50,126. By comparison, divorced men have only $58,951 while divorced women have only $38,613. The NIRS study that discussed the wealth discrepancy between elderly people who are divorced and those who are married. Based solely on account balances, poverty among the elderly is significantly more prevalent in divorced individuals.
What can be done to minimize the damage?
Depending on the length of a marriage, a spouse may be eligible to receive Social Security spousal or survival benefits even if the marriage ended in divorce. The party who received the smaller income can often receive a boost in their own Social Security income if they were married for at least 10 years.
It is also highly advised that an individual begin rebuilding their retirement savings as soon as their marriage is over. Combining this savings method with intelligent investing can help reduce the damage to a divorcee’s retirement account.
Anyone going through a divorce may wish to work with an attorney who is well-versed in their state’s family law system. This attorney may not only help their client navigate through the uncertainty of a divorce but also might advise them on rebuilding their own financial portfolio.