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Planning for Retirement: The Impact of Divorce 

Jun 01, 2018

Key Takeaways

  • Divorce creates financial challenges for millions of Americans.
  • Provisions from the Tax Cuts and Jobs Act of 2017 will likely add to those challenges.
  • With careful planning, individuals can improve their chances of achieving financial security.


The divorce rate in American society remains at a high level, with 55% of all households heading towards retirement containing at least one person who was previously divorced.

Data from the Survey of Consumer Finances, which is used in calculating the NRRI, indicate that changes brought about by the Tax Cuts and Jobs Act of 2017, especially in terms of alimony, will likely make the financial challenges of those impacted by divorce even more daunting.

 

At particular risk is retirement preparedness. According to National Retirement Risk Index (NRRI) research conducted by the Center for Retirement Research (CRR) at Boston College, the impact of divorce on households is significant – those having at least one person who has been through a divorce increases their risk of not being able to maintain their standard of living in retirement by seven percentage points.

The good news is that with careful planning, many divorced couples may improve the chances of enjoying a financially secure retirement.

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For greater detail on how divorce may impact retirement planning and taxation,

 You may also be interested in other National Retirement Risk Index topics.

The National Retirement Risk Index (NRRI), published by the Center for Retirement Research (CRR) at Boston College, measures the percentage of working-age households at risk of being unable to maintain their pre-retirement standard of living during retirement.

Prudential is the exclusive sponsor of the National Retirement Risk Index.

The information is not intended as investment advice and is not a recommendation about managing or investing your retirement savings. Clients seeking information regarding their particular investment needs should contact a financial professional.

 

 

The Prudential Insurance Company of America and its affiliates Newark, NJ.

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