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Will a divorce derail early retirement?

Many people are working well into their senior years these days, whether out of necessity or because they enjoy what they do. Others who have worked hard, lived frugally and saved and invested wisely prefer to retire years before they're eligible for Medicare and Social Security. They may want to travel the world, spend time with their grandkids or start a second act building sailboats or showing their prized tulips.

However, what if your spouse files for divorce before you have a chance to start this new life and seeks spousal and/or child support? Does that put an end to your dreams of early retirement?

That depends. Massachusetts law includes something called "attribution of income." That means that if you choose to stop working prior to the age at which you are eligible for full Social Security benefits (67 if you were born in or after 1960), the amount of support you are required to pay will be based in part on what you were earning before you quit your job and the lifestyle that you and your family were living.

It's important to work with your Massachusetts family law attorney to prove that as many assets as possible are individual and not marital property. For example, if you had a mutual fund before you married that is now worth a considerable amount of money and your spouse didn't contribute to it or benefit from it, you shouldn't have to split that.

If you were living a modest lifestyle in anticipation of retiring early, that can help minimize the amount of support your spouse is entitled to receive. You'll need to provide evidence of that, such as receipts.

If you have a prenuptial or postnuptial agreement that identifies the assets you intend to live on in your retirement years as solely yours and they haven't been commingled with your spouse's assets, this can help you save your retirement nest egg. Your attorney can work with you to find other strategies to help you rescue your dreams of early retirement even after divorce.

Source: Boston Herald, "Divorce papers may foil plan to retire at 50," Wendy Hickey, May 28, 2017

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