Divorces later in life have become more common in recent years. Many people realize that they have grown apart after years of marriage. They may decide to divorce before they retire or early in their retirement years so that they can enjoy their golden years to the best of their ability.
The issue holding many people back from pursuing their best lives during retirement is the possibility of economic hardship. Most married couples share retirement savings, and people worry about losing those resources when they divorce. Yet, the following steps can help people minimize the negative impact of divorce could have on their retirement plans.
Keeping the conflict minimal
The average cost for divorce can range from a few thousand dollars when people file for uncontested divorces to tens of thousands of dollars when they litigate most of the major terms for their divorces. The need to pay for a largely expensive divorce can force people to tap into their savings or prevent them from setting resources aside for months or years after the divorce. Therefore, finding ways to cooperate and minimize the conflict during the divorce can reduce how much the divorce costs and how much money goes toward paying for the divorce instead of saving for retirement.
Dividing accounts carefully
Some spouses can negotiate property division settlements where they do not actually divide retirement accounts. Many others will split some of their retirement savings with their spouse because there is no other reasonable way to address those resources given the contents of their marital estate. If the division of retirement funds is a requirement, following the right process is crucial to the preservation of those funds. Someone making a withdrawal from a 401(k) before they reach retirement age might have to pay a 10% penalty in addition to the taxes due because of the early withdrawal. People use a qualified domestic relations order (QDRO) approved by the courts to divide their retirement savings, then they won’t need to worry about penalties and taxes.
If someone recognizes that retirement security is a major concern in their case, seeking legal guidance and conducting a careful review of their finances could help them begin planning for the best life possible after divorce. Approaching a West Virginia divorce strategically can minimize the negative financial impact the end of a marriage has on each spouse.