If we thought Social Security was complicated enough, let’s add fuel to the fire by talking about relationships. Relationships are fickle, trickly, simple, delicate, and sturdy all at the same time. No one in a committed relationship necessarily plans for it to end, but at the very least it may be a good idea to understand the effects ending a relationship, i.e., divorce or death, can have on our retirement plans. CNBC’s Sarah O’Brien reports on how retirees can reevaluate their retirement backup plan, after a divorce or death disrupts their finances.
No one can know the future. We have a romanticized outlook on retirement, where we and our spouse will enjoy this epic retired live. That’s a beautiful goal, and is something that can be possible; however, it’s also true that people get divorced or pass away. In those cases, it becomes more important to have a retirement backup plan.
According to O’Brien, 51 percent of divorced or widowed women retirees are forced to step away from the workforce earlier than they want, by unforeseen circumstances. When that happens, for anyone, it can mean that the retirement plans we had need to change on a dime.
Retirement Backup Plan
Having a backup plan may seem cold or depressing, but remember it is always better to have a backup plan and not need it rather than to need one and not have one. A healthy method to build a retirement backup plan is to work together with your spouse if you can. Spousal benefits, even in divorce, can benefit you if your spouse is the higher earner.
Knowing what each other is “financially worth,” can help you build a plan together and know how to formulate a backup plan should the need arise. Talking with financial advisors, as an outside party, can help you get a clearer understanding of what your assets are worth from a fresh perspective.
For more retirement tips and tricks, make sure to follow the Council for Retirement Security.