How to effectively rethink one's post-divorce retirement plans

The realities of post-divorce life will often require people to drastically rethink their retirement plans.

Even in the best of circumstances a divorce is bound to take a financial toll on those going through it. Not only can dividing property leave one or both spouses with fewer assets than they anticipated, but post-divorce life can also bring with it its own unique set of financial challenges. As a result, rethinking one's retirement plans is essential for those going through a divorce, especially those who are divorcing later in life or after a long-term marriage. While the financial challenges of divorce can be serious, preparing for them beforehand is the best way to protect one's retirement dreams.

Thinking about retirement

As CBC News points out, rethinking one's retirement plans is especially important for those who are divorcing and close to actually retiring. Because such people typically have a very limited window for contributing further to their retirement funds, ensuring that they come out of their divorce with their existing retirement funds largely protected is essential.

However, the importance of retirement planning during divorce is not limited to older divorcees. Indeed, even younger couples going through a divorce need to think about the long-term implications of their divorce on their financial plans. For example, if either spouse has a pension plan then deciding whether that pension will be split with the other spouse or held onto entirely in exchange for giving up another asset could have serious implications for both parties for years afterwards. Other commitments, such as spousal maintenance and child support, also have the potential to seriously impact one's retirement plans.

Post-divorce finances

One challenge that far too many spouses do not adequately take into consideration when reworking their retirement plans is how expenses differ for single versus married people. As the Globe and Mail points out, in many cases being single means seeing one's expenses increase by about 30 percent. The reason for the increase is that while being single can help reduce some expenses, such as food and housing, many expenses, like property taxes, gas and utilities, may remain the same but will have to be taken care of on a single income.

Post-divorce financial planning tends to be especially difficult for those coming out of a decades-long marriage and these people also tend to be the ones for whom retirement is fast approaching. The reason financial planning tends to be so difficult in these instances is that in many marriages one spouse will have long taken care of the couple's budgeting and other financial concerns. As a result, the other spouse is often unprepared for dealing with the realities of financial planning. That lack of preparedness, for many people, makes it especially difficult to understand whether or not a proposed divorce settlement will help protect their long-term interests.

Getting legal help

A lawyer, fortunately, can help those going through a divorce make the best decisions when negotiating a settlement. While a lawyer is not a financial advisor, she can nonetheless help clients who are in the midst of a divorce understand how the decisions make today during their divorce negotiations could impact them years later.