Divorce can have a significant impact on a person’s retirement plans, especially for individuals getting divorced after the age of 50. The closer a person is to retiring, the more of a hit their retirement funds may take when getting divorced.
This is because spouses typically split their retirement assets in the divorce settlement, which can make it more difficult for someone to stay on track with their retirement goals. Many older people getting divorced worry about how their retirement plans will change after getting divorced and if they will end up working longer than they originally planned.
Older spouses getting divorced have several considerations to make during divorce negotiations, and one of the most important issues to consider is how the divorce will impact their retirement savings. The retirement accounts will be changed after divorce but there are steps to take to keep a person’s retirement plans on track after the divorce is finalized.
What should people getting divorce consider during their divorce negotiations? One of most important things to think about is whether or not you should keep the home or if it would be better to take more retirement assets. Owning a home on your own can be difficult and there are unexpected costs with owning property. That is why it may be more beneficial to accept more retirement funds instead of keeping the house.
It is also important to consider the tax implications of the retirement funds and if they are pre-taxed or not. Roth IRAs are already taxed so when you withdraw money from the account you will not have to pay taxes on that money during retirement.
There are several other considerations to make when dividing retirement assets during divorce. Individuals should consult a divorce attorney to understand what steps to take to ensure their retirement goals are still achievable.
Source: Forbes, “4 Divorce Mistakes That Can Derail Retirement,” Aug. 21, 2013