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With 'gray divorce' on the rise, are your retirement savings adequate?

According to the Pew Research Center, the divorce rate among those 50 and older doubled between the 1990s and the mid-2000s. This so-called "gray divorce" is even more prevalent among people in their second or later marriages -- and there are a lot of those in the Baby Boom generation.

One of the main challenges in a gray divorce is asset division. That's natural, since people in their 50s don't have as many minor children, but the real issue is dividing a lifetime's worth of assets and retirement savings in a way that allows both exes to live comfortably.

Unfortunately, this may be getting more difficult. A recent report from the Government Accountability Office says that the systems in place to ensure Americans have sufficient money in retirement aren't working for everyone.

The GAO says that the three pillars of our retirement system are not providing adequate security for an increasing number of people. Those three pillars are:

  • Social Security
  • Workplace retirement plans
  • Individual savings

Two major reasons for the shortfall are 1) the insecurity of the Social Security system, which may be unable to pay out full benefits by 2035; and 2) "substantial liabilities" at the Pension Benefit Guaranty Corp., a benefit program for multiple employers. In addition, the GAO cites a "marked shift" to defined contribution plans like 401(k)s and away from defined benefit plans like pensions.

What can you do to ensure adequate retirement savings after your divorce?

If you're over 50 and considering a divorce, you can't do anything about societal factors like threats to Social Security. What you can do is take the issue seriously in the asset division portion of your divorce. When choosing a lawyer, be sure to ask how familiar they are with dividing assets and retirement plans.

Your attorney should be able to explain how best to preserve what you have earned while still dividing your assets equitably. They should be able to tell you what options you have, what trade-offs you can make, and the tax consequences of each. They should be able to handle the division of whatever assets you have, including pensions, 401(k)s, marital trusts, shared businesses, family homes, vacation properties, inheritances and more.

The right divorce lawyer can help ensure the value of your marital estate is maximized before dividing it. You should not have to lose value during the asset division process.

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Norcross, GA 30071

Phone: 770-901-2917
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