When Pennsylvania couples get a divorce, their retirement savings may suffer. The National Institute for Retirement Security found that the average amount of money in retirement for divorced women is $38,613 while for married women it is $50,126. For divorced men, the average is $58,921 compared to $84,874 for married men.
Rebuilding retirement savings
Although it is clear from these figures that the outcome for divorced women on average may be more negative than for divorced men, women who divorce when they are younger are less affected since they may have decades left in the workforce to rebuild their retirement savings. However, there are still challenges since running a household on one income is more expensive than doing so on two incomes.
Tips for increasing savings
People who were married for at least 10 years might want to look into whether they are eligible to draw more money on a spouse’s Social Security contributions than their own. After a divorce, people also need to prioritize saving for retirement although this can be a challenge. Automating money to go into the retirement account from each paycheck can help. People might also want to look into other types of investing. In many marriages, one person is largely in charge of this, so some individuals might need to begin by learning more about investments.
When it comes to dividing retirement savings and other assets in a divorce, people should play close attention to how taxes, withdrawal penalties and other costs associated with the asset might affect its face value. Some couples may agree for one person to keep certain assets, such as a retirement account, while the other may keep an asset of similar value, such as a savings account. However, the retirement account might be less liquid than the savings account, and there could be taxes on withdrawals.