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One of the key goals for millennials and younger generations is early retirement with financial independence. Even before the pandemic, this generation has prioritized the ability to work hard now, save diligently, and eventually pursue other passions and aspirations after stepping away from full-time work. While personal goals may vary, the common theme is clear—people want to retire earlier than the traditional age to enjoy life with financial security and plenty of time to explore their interests. In the context of divorce and retirement planning, it’s crucial to navigate these ambitions carefully to ensure that your financial independence remains intact, even during life’s transitions.
Achieving Financial Independence and Early Retirement as a Couple
This goal is often more achievable when pursued with a spouse. A typical household comes with bills and responsibilities, but marriage generally increases household income without significantly raising expenses. As a result, you and your spouse could combine your incomes and goals for financial independence. It is likely that if you have these types of goals in mind you have been diligent about preparing and intentional about goal setting.
Whereas some people purchase a new home at the top of their budget, you and your spouse may have decided to purchase a much more modest home to pay off the mortgage early and therefore have more money to invest in saving. You may have decided to delay having children or choose not to have kids until you achieve your financial goals. You may have even decided to work multiple jobs and have multiple streams of income to maximize your income-earning ability while you are in the prime of your income-earning life. new paragraph, it takes a strong degree of planning for a family to be able to accomplish the goal of financial independence and early retirement.
The Impact of Divorce on Early Retirement and Financial Independence Plans
For those of you who are planning on living a life that is based on principles related to early retirement and financial independence, even the slightest disruption to your income or other household responsibilities can cause your plan to the negatively impacted. Even though you may have a very conservative lifestyle if your income is average then it does not take much to throw your plans off. While your goal to retire early may not be one that is essential to your happiness in your life it is certainly important, nonetheless. As a result, you have probably been spending a lot of time pondering over this goal and whether it will ultimately be achievable.
This is especially true if you are going through a divorce. As mentioned earlier in this blog post, achieving financial independence is often more feasible when both spouses are on the same financial page. Spouses who combine their incomes and work together are typically better prepared for the future. However, divorce disrupts the unity you shared with your spouse, both in your marriage and your mutual vision for the future. Your shared vision is now in question, and your marriage seems to be coming to an end.
Can You Maintain Your Early Retirement Goals During a Divorce?
What exactly does this mean for your goals of retiring early with financial independence? Do you have to abandon those goals, or can you modify them to fit your current circumstances? This is what I would like to discuss with you in today’s blog post. Namely, what does it mean to get a divorce while having substantial financial goals that involve financial independence in the ability to retire on your terms and ahead of schedule based on your age? Do you need to give up on these goals if you were going through a divorce or can he maintain the goals despite the bump in the road presented by your divorce case?
Before you commit yourself one way or the other on these topics, I recommend taking a moment to read through today’s blog post first period every divorce case in every family that the Law Office of Bryan Fagan is fortunate enough to work on leads us to the belief that your family and your circumstances are incredibly unique. It should also follow that your goals are also unique to you and your family. If at the end of today’s blog post, you have questions about the material you have read and how your family’s goals may factor into this discussion and I recommend contacting the Law Office of Bryan Fagan.
Our experienced family law attorneys provide personalized service tailored to your unique needs and goals. We don’t create goals for you; instead, we listen carefully to understand your vision for yourself, your children, and your family. With those goals in mind, we craft a divorce process that aligns with your aspirations. If financial independence and early retirement are important to you, we will incorporate these objectives into the structure of your case.
Increase the Peace to Promote Financial Independence
One of the fastest ways to burn money in a divorce case is to create a high-conflict, high-stress divorce with your spouse. I know that some of you may find yourselves in a position where you cannot help but be in a high-conflict divorce. If you have unique circumstances with your kids, a spouse that you truly do not get along with, a high net worth divorce, or even special circumstances regarding finances then you’re divorce may already be one that could be classified as high conflict. In that case, the best you may be able to do is not add any conflict or stress to an already difficult environment.
Achieving Early Retirement Goals Through an Amicable Divorce
However, many of you are in circumstances that lend themselves to an amicable and relatively peaceful divorce. I say this knowing full well that you probably don’t feel like that right now. That is understandable. After all: you are endeavoring to get through a divorce and nobody’s house is particularly happy during a divorce. However, just because you were going through a divorce doesn’t mean that you must sign up to fight a war against your spouse. Rather, there are steps you can take to increase the peace and in doing so maintain your goal of retiring early with financial independence.
One of the biggest and most incorrect assumptions that people make about divorce cases in Texas is that divorces frequently end up in court. We have all seen movies and television shows where the two parties to the divorce slinging mud at each other, metaphorically, to make their points and achieve whatever goals they have. All the while, a seemingly helpless family court judge simply bangs their gavel repeatedly to reach some semblance of order and decorum in their courtroom.
Avoiding Court and Maintaining Financial Goals Through Mediation
The reality is that your divorce almost certainly will not be like this. For one, there are avenues to avoid court altogether that are provided by the legal system in Texas. First, most of your divorce case is not spent in meetings or other high-conflict situations. On the contrary, there is a great deal of downtime in a typical divorce where you and your spouse will be able to take some time to your cells to work on a resolution to the important subjects in your life. Fostering a spirit of engagement and negotiation is an important role for your attorney to play. If you can work with your spouse on negotiating through the important subject matter in your case, you are less likely to resort to litigation. This can save you time, money, and stress.
Mediation is an example of one method of how courts can be avoided for your divorce. Mediation allows you and your spouse to select a mutually agreeable third-party family law mediator to help you work through any outstanding issues of your case. This reduces costs, and importantly allows you and your spouse to play the central role in ending your marriage. If you have any goals that are outside of the box, such as early retirement and financial independence, you should not necessarily feel all that comfortable leaving it up to a judge on how to and your marriage.
Why Negotiating Your Divorce Goals is Better Than Relying on a Judge
The fact is that a family court judge will do their best to follow the law it also used their own experience in determining how to divide property and conservatorship rights to your children. However, a family court judge will never get to know you, or spouse, or your goals well enough to be able to act as a substitute decision-maker when compared to you and your spouse. Rather, if you have a particular goal for your finances or your life after a divorce then that is something that you should work to maintain with your spouse at the negotiating table. The family court judge will do their best to be fair, but it is not as if the judge will be concerned first and foremost with your financial independence, or retirement early goals.
By reducing the stress and conflict in a divorce you can better save money. Frequently, the most expensive parts of a divorce have to do with trial preparation. Preparing for a trial requires significant effort, and you’ll spend at least one day in the courtroom with your attorney, often spanning two or three sessions. During this time, your attorney will continue billing you for their work on your case. If you thought that the occasional work that the attorney did for your case was expensive, then you should consider what the attorney costs for working on your case continuously over a multiple-day period.
Property and the Division of Assets and Debt
One of the most important considerations that you need to make in your divorce from a financial perspective is how Community property will be divided. This means that Community property must be classified and then a plan must be created to determine how to divide the property. As with anything else, a family court judge can play a central role in this process. However, that should not be your goal in this matter. Rather, you and your spouse should seek to negotiate through the subject of Community property division. This will allow you to maintain your specific goals much better and two move past any issues with mistrust or anger held towards the other person.
Remember that how you divide your property will play a critical role in determining whether you will be able to retire early and maintain a sense of financial independence. One thing to keep in mind is that while you may have a low amount of debt to your name, your spouse may have a complicated community estate involving significant amounts of retirement savings, real estate, and other assets. A lifetime’s worth of saving and diligence can be destroyed by an unfair or unjust method of Community property division.
Creating a Property Division Plan for a Fair Divorce Settlement
To avoid putting yourself in a situation where you are left with less property than you should have been after the divorce is over it is a wise idea to have a plan when it comes to dividing property. This discussion begins with understanding what sort of property you own. For our clients, this means you should begin to take inventory of the property that you own and then do a basic appraisal of the property to determine what each item is worth. Once you consider personal property, real estate, vaccines, retirement savings, and any other asset you might own you can begin to figure out how big your community estate is
From there, you can create plans on how to divide the property. The more specific you can be with your spouse or likely the more receptive he or she will be when it comes to negotiation. I have seen well-intentioned individuals struggle to negotiate on Community property division if only because the parties were not prepared and operating under the same facts.
When you work with your spouse on this subject of negotiation you should do your best to provide documentation and proof of the facts and figures that you are throwing around. The more specific you can be with your negotiations the more likely your spouse will be to be receptive or at least consider your proposals. If it seems like you are making up figures out of thin air or otherwise trying to unduly influence your spouse and he or she may not want to consider what you are proposing.
Aligning Financial Goals with Your Spouse for Early Retirement Success
One thing for you to consider would be whether your spouse shares your goal of financial independence and retiring early. I would think that for most of you reading this blog post, that is a goal held by the two of you. It is difficult enough to achieve a goal like this on your own, but with a spouse who is not on the same page as you, the goal could very well be impossible. As a result, you should talk to your spouse about how to divide up your community estate in a way that allows both of you the greatest opportunity possible to achieve your goal of financial independence in the short-term hand while retiring early in the longer term.
Or you may find that your spouse is not as driven by financial independence or retiring early period in fact, this may have been one of the aspects of your marriage that pushed the two of you towards divorce. In any event, if you can talk to your spouse about their goals, you can learn how to negotiate with him or her more effectively. It makes no sense to continue to talk to your spouse using your language and your goals. Rather, if you can approach your spouse with their goals in mind first and foremost you have a much better chance of also accomplishing whatever goals you have, be it related to financial independence, retiring early, or anything else regarding your case. This is probably your best course of action if you want to maintain a lofty goal such as financial independence and retiring early.
Conclusion
Divorce and retirement planning require careful consideration and strategic action to protect your financial future. As many millennials and younger generations strive for early retirement, it’s essential to ensure that your retirement goals remain on track, even through significant life changes like divorce. By planning ahead, staying informed, and seeking professional guidance, you can navigate these challenges and continue to work toward the financial independence and lifestyle you desire. Prioritizing both your long-term retirement goals and your immediate needs during a divorce can help set you up for a secure and fulfilling future.
Questions about the material contained in today’s blog post? Contact the Law Office of Bryan Fagan
If you have any questions about the material contained in today’s blog post, please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed family law attorneys offer free-of-charge consultations six days a week in person, over the phone, and via video. These consultations are a great way for you to learn more about the world of Texas family law as well as about how your family circumstances may be impacted by the filing of a divorce or child custody case.
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