Divorce creates emotional and financial challenges, and it is important to safeguard your financial future.
Protecting your retirement during a divorce requires careful planning and consideration.
Learn about marital versus separate property
All the property you owned and all the contributions you made and the interest you received on your retirement accounts before you got married are separate property. This property is not subject to division. Any assets you had as well as interest you earned or contributions you made to your retirement accounts during your marriage is martial property. The courts can divide these assets.
Understand your retirement accounts
In 2022, 989,518 married women sought a divorce, which endangered their retirement savings as well as that of their spouses. Therefore, if you seek a divorce, you should first gain a clear understanding of your retirement accounts. Learn about the types of accounts you and your spouse have, such as 401(k)s, IRAs or pensions. Your spouse’s contributions to his or her accounts can offset your contributions to your own.
Negotiate your settlement
One of the best ways you can protect your retirement accounts is to pursue negotiation. You may have marital assets that you can surrender in place of your retirement money. For example, you may offer a vehicle, artwork, the family home, investments or other valuable asset.
Negotiation prevents you from incurring taxes on the divided money. It also allows you to continue to gain higher returns due to your balance in these accounts. In addition, you have time to recoup the losses you may experience through negotiation.
Stay actively involved in managing your finances post-divorce. Monitor your retirement accounts regularly and stay informed about changes in tax laws or retirement planning strategies that may affect you.
