No Matter What You Are Feeling, Ruppert Law Firm Can Guide You

Could divorce derail your retirement plans?

On Behalf of | Jan 16, 2025 | Divorce, Property Division

During the divorce process, it is important to pay close attention to how the end of your marriage might affect your retirement savings. These financial considerations are essential, whether you are close to retiring or it is still many years away. What should you know about how your divorce could change your retirement plans?

Dividing your retirement savings could leave you without enough savings.

Generally, retirement savings accumulated during a marriage are considered marital property. This means the court could divide this savings in a divorce. Dividing significant retirement assets such as 401(k)s, IRAs and pensions could leave you with less than you planned for your retirement years.

If you were counting on your spouse’s income to help save for retirement, you might have to take on that responsibility by yourself now. This requires careful budgeting and planning to make sure you can still meet your retirement goals. You may also need to put a greater portion of your income aside for retirement than you did before divorce.

Divorce could mean losing out on benefits.

If you were expecting to benefit from your spouse’s retirement plan, like a pension with survivor benefits, getting divorced might mean you lose that support. You could also lose other benefits like health insurance under your spouse’s plan. This could increase your personal expenses and affect your ability to save for retirement.

How can you protect your retirement savings?

Since everyone’s situation is different, it is important to get advice that fits your needs. Talking to legal and financial professionals early in the divorce process can help protect your retirement interests. Knowing your rights and options can help you negotiate a settlement that keeps your retirement goals on track.

Keep in mind that it is possible to prioritize your retirement savings when dividing your property. For example, you could allow your spouse to keep other assets of similar value in exchange for keeping your retirement accounts intact. For example, if you will sell your home as a part of your divorce, your spouse might keep a greater share of the proceeds from that sale.

After the divorce, you might need to rethink and adjust your retirement goals. This could mean changing when you plan to retire, how you want to live during retirement, or where you want to retire, based on your new financial situation. It is important to update your retirement plan and consider whether you need to work longer or save more aggressively to achieve your retirement needs.

Divorce can definitely make your financial situation more complicated, including your plans for retirement. However, with proactive planning and informed decision-making, you can handle these challenges and secure your financial future.