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Divorce can impact financial status in retirement

The process of getting divorced can understandably take a toll on a person, both emotionally and financially. The financial cost of getting a divorce goes beyond legal fees, however: It can also include having to maintain two homes and watch electricity bills and other costs double. This can have long-term consequences on both former spouses, including preventing people in Illinois from being prepared for retirement.

In many cases during divorce, a woman with children wants to keep the family home and is willing to trade away available retirement assets for it. However, this can be a huge mistake. Sometimes the woman simply cannot afford the costs associated with maintaining the house, and even if she can, she may end up being behind on her retirement savings.

This is one reason people who have gotten divorced have a higher chance of not being financially secure when they reach their 60s and beyond. Research shows that the rate of poverty is low for Americans older than 62 who have not gotten divorced, with a rate of 3.4 percent. However, 19 percent of individuals who were divorced after age 50 are not financially stable, and the figure is at 16 percent for people who were divorced before turning 50.

Proper legal guidance may help people in Illinois to make educated decisions regarding how to tackle complex matters, such as asset division and property distribution, during divorce. If two people are able to address these matters and reach a settlement through negotiation, they can avoid further court intrusion. However, if they cannot see eye to eye, a judge will have to decide for them how their assets and property will be split, and the outcome might not align with one or both parties' wishes or needs for the future.

Source: bloomberg.com, "Divorce is destroying retirement", Ben Steverman, Oct. 17, 2016

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