According to one survey, women who get married for the first time when they are aged 15 to 20 are more likely to be divorced. People who get married between ages 28 and 32 are more likely to be married for longer. However, people can get divorced at any age and it does not make the process any easier. Couples who end up getting divorced around the time of retirement may even face additional challenges.
Divorce and Retirement in North Carolina
Divorce can be costly. Divorce around the time of retirement can also affect your ability to retire securely as it can greatly impact your retirement savings. According to one study, women are disproportionately affected after a divorce with a greater decline in standard of living. Women average a 45% decline in standard of living after a divorce, compared to 21% for men.
Alimony payments are often limited based on time and other events. For example, spousal support may continue for a number of years but not extend into post-retirement age. Additionally, alimony is often tied to staying unmarried and marriage will end support payments.
One of the issues in a divorce is dividing assets. Under North Carolina law, property division is based on “equitable distribution.” However, equitable is not necessarily the same as equal. One spouse may keep a major asset like the family home in exchange for an equivalent amount of money. However, financial assets like savings or retirement accounts are generally more liquid than property assets. This can be a problem in later years when a large house is not necessary and requires ongoing investments to maintain the property.
Stay-at-home moms who are raising children instead of working can also miss out on Social Security benefits if they were not married long enough to qualify for Social Security benefits. Generally, a spouse who did not work enough to qualify for Social Security needs to stay married for 10 years or more to qualify for half of the working spouse's benefits.
Retirement Savings and Divorce
Many people contribute to their retirement savings both before and during marriage. Contributions can include both individual and marital assets. The different sources of retirement savings can be further muddled when combining retirement accounts or rolling over retirement plans, including IRAs and 401(k)s. At the time of divorce, it may be difficult to determine how much retirement savings were funded by separate assets or marital assets.
Small Business Owners and Divorce
Divorce can be very complicated for small business owners with so much of their personal wealth tied up in the business. Even if the business is primarily run by only one spouse, the value of the company may be considered marital property. Many small business owners have the business as their primary source of retirement savings. Suddenly losing half of the value of the business in a divorce can be a major blow to retirement plans for business owners.
Prenuptial Agreements in Divorce
Prenuptial agreements can provide a way for an individual to maintain separate retirement savings after a divorce. However, most couples do not consider making prenuptial agreements in anticipation of separation or divorce. In some cases, a post-nuptial agreement can also deal with retirement savings. Talk to your North Carolina divorce law attorney about how you can plan for a divorce or separation while protecting your retirement savings.
Divorce Lawyers in Shelby
At Caulder & Valentine Law Firm, PLLC, we have helped our clients handle complex divorces, including dividing business assets and retirement savings. If you have any questions about divorce in North Carolina, contact us today for a consultation.