Decisions based on emotion or short-term thinking can easily affect when you retire. Research finds women are disproportionately affected, because they often take time off to stay home with children or work in a lower paid profession. The average income of women in retirement is $10,000 lower than men.

The timing of a divorce also matters. For instance, if a marriage did not last for 10 years, the woman is not able to take advantage of her spouse’s higher earnings for Social Security purposes.

Divorce decisions can hurt retirement prospects

Here is a common scenario. A husband makes six figures providing the resources for the mom to stay at home with small children. His work-sponsored 401(k) retirement savings has a balance in the six figures when they decide to divorce.

In the divorce, the husband receives much of the retirement money as an offset for equity in the home. The wife doesn’t have the cash flow to pay for mortgage and associated costs and sells the house. Then she is forced to cash out the retirement money to cover groceries and other everyday expenses.

Whether spending time in school or on a job search, it may take some time until she is able to contribute to her retirement account. Assume she starts regular contributions again at age 45. There is just not enough time to make up for the losses.

Working longer

Working more years is one way to build up the nest egg. Studies are finding that more Americans risk running out of money in retirement.

Part of the blame lies on the shift from pensions to defined-contribution 401(k)-type accounts. Divorce is another reason. This is at the same point that medical costs continue to increase. This underlies another statistic from the General Accounting Office that finds 18 percent of divorced women have retirement incomes below the poverty line.

What to do?

In this landscape, the importance of an accurate valuation on retirement assets cannot be stressed enough. Sometimes this requires an expert when a pension is involved. Know the tax consequences of various accounts – taxes will eat into 401(k) disbursements more than those of a Roth account. Think about cash flow and liquidity of assets as well.

Do not let mistakes during a divorce haunt your financial future. An experienced divorce attorney can help you negotiate a fair divorce agreement that takes into account the long term.

Source: Slate.com, “Think Divorce Is Miserable? Look how bad life can get when divorcees try to retire,” Helaine Olen, Mar. 18, 2016