Ending your marriage may have a significant impact on your finances both now and in the future. For example, it may make it difficult to afford your Illinois home or essential items such as food or clothing. It’s also possible that taking such a step may force you to rethink your retirement plans or to come out of retirement to cover your living expenses.
You may have less to contribute
As part of a divorce settlement, you may be required to make alimony or child support payments. You may also be required to make vehicle, housing or medical insurance payments for the first time. These expenses may reduce the amount available to contribute to an IRA, 401(k) or other retirement accounts. Ultimately, you may need to push back your retirement date to ensure you have enough time to save for life after leaving the workforce.
You may lose existing savings
Any money placed in a retirement account during a marriage will likely be seen as a marital asset. Therefore, you may need to cede a portion of the account’s value to your spouse as part of a final settlement. You may also need to withdraw money from a retirement account to meet your financial needs before, during or after a divorce. By dividing retirement accounts with your spouse, you may lose most or all of the financial cushion that you might have had before ending your marriage.
Ideally, you’ll consider the financial ramifications of a divorce prior to getting one. Doing so may help you determine what you’ll want or need from a settlement, which may help you negotiate a deal in an affordable and timely manner.