2 ways that divorce can impact your retirement

On Behalf of | Oct 23, 2024 | Family Law

If you’re getting divorced, it can have an impact on your plans for future retirement. This is especially an issue if you are 50 years old or older, which is known as a gray divorce. You are getting closer to retirement age, so you need to pay close attention to your financial future while getting divorced.

But how is the end of your marriage going to change the way that you retire? Here are two things to consider.

You need to make a new budget

First of all, you likely need to make a new budget and consider what your long-term costs are going to look like. Odds are that you and your spouse were previously planning to retire together. You would have been sharing numerous costs, such as housing and utilities. Additionally, you may have anticipated multiple sources for retirement income – your own savings and your spouse’s pension, for instance. If any of that is changing, you just need to reassess what your financial picture will look like and what you can afford when you retire.

You may need to use a QDRO

Additionally, some retirement benefits – like an employer-sponsored retirement plan or a pension plan – can be divided with a qualified domestic relations order. If your spouse was going to receive a pension and you planned to retire with it, for example, the QDRO may say that you get a certain percentage of that pension in the future. Marital assets have to be divided during divorce and retirement accounts often qualify as marital assets.

The financial side of divorce can certainly get complex, especially around retirement, so be sure you know what legal steps to take.

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