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A divorce could hurt your early retirement plans

On Behalf of | Nov 7, 2021 | Divorce

People today have access to more wealth than ever before. Between cryptocurrencies and fast-growing stocks, investments may have you in a position where you and your spouse could retire early. 

That dream may never come to fruition if you divorce and make financial errors in the process, though. While retirement issues are often most concerning to those 50 and older, you, in your 20s, 30s or 40s, may also want to be cautious if you plan to retire early.

Planning for early retirement when you divorce young

If you are divorcing under the age of 40, you may still be able to keep your retirement plans on track by being cautious about how you divide your assets. For example, if you and your spouse own a property in an area where property values are growing each year, then you two may agree to hold on to that property until the equity built up in it gives you both the return you expected. You might also opt to rent out a property you had intended to sell as a way of bringing in additional income during your divorce.

In terms of your stocks, bonds and investments, sometimes maintaining those in full rather than dividing them at present is a good choice. You might come up with an arrangement to divide investments when they reach a certain price point since a larger amount of money invested will tend to earn a better return over time, thanks to dividends and compound interest. 

You’ll want to make sure not to ignore the tax implications associated with selling stocks, closing retirement accounts or selling property. Get a complete financial picture before you divide your assets, so you and your spouse understand how those assets could grow in the future and if dividing them now is the right choice for you.