Five Retirement Issues You Need to Resolve During Your Divorce

The vast majority of divorcing women are much younger than their so-called "Golden Years", and yet it's essential that every woman address the issue of retirement during divorce negotiations.

Why?

Because the decisions you make during your divorce can have a serious impact on your financial well-being --not just in the short-term, but in the long-term, as well. We all know that life expectancy for women is higher than ever. It now stands at 80.3 years, and that means any divorce settlement you achieve is likely going to have an impact on your life for decades yet to come.

Someone once said that marriage is all about love, and divorce is all about money. They were right, and there's no getting around these two simple truths:

1. When you're in the throes of a break-up, you must Think Financially, Not Emotionally®, and

2. You must negotiate a divorce settlement agreement that financially protects you now, and well into your retirement years.

As a fundamental part of your divorce team, a qualified divorce financial planner can help ensure that you achieve financial stability today, even while you plan thoughtfully for the years ahead. (Who should be part of your divorce team? )

Here are five specific issues that need to be addressed:

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Retirement funds

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When you were married, you and your husband planned for retirement together. Perhaps you even put all of your funds into your husband's work retirement account because you thought you would still be married when you retired. Obviously, divorce changes every one of those plans and requires the careful scrutiny of all retirement accounts. Retirement plans such as pension plans, 401(k) plans, and Individual Retirement Accounts (IRAs) are typically treated as marital property. (What is marital property?) However, the process by which they are divided depends upon a number of factors. For example, the court must adhere to federal guidelines when dividing funds in a 401(k) plan, but state laws dictate how IRAs are divided. As you can see, it's critical that your divorce settlement agreement clearly spells out how the assets are split and how those funds will be transferred. There are even more thorny issues to contend with when you need to divide a pension plan.

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When you were married, you and your husband planned for retirement together. Perhaps you even put all of your funds into your husband's work retirement account because you thought you would still be married when you retired. Obviously, divorce changes every one of those plans and requires the careful scrutiny of all retirement accounts. Retirement plans such as pension plans, 401(k) plans, and Individual Retirement Accounts (IRAs) are typically treated as marital property. (What is marital property?) However, the process by which they are divided depends upon a number of factors. For example, the court must adhere to federal guidelines when dividing funds in a 401(k) plan, but state laws dictate how IRAs are divided. As you can see, it's critical that your divorce settlement agreement clearly spells out how the assets are split and how those funds will be transferred. There are even more thorny issues to contend with when you need to divide a pension plan.

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Many people start their post-divorce lives not fully understanding that their settlement must last for many years --and maybe even for the rest of their lives. Working with a professional divorce financial planner can help you transition to the next phase of your life by prioritizing financial goals and developing realistic financial plans for your future.
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Jeffrey A. Landers, CDFA™ is a Divorce Financial Strategist™ and the founder of Bedrock Divorce Advisors, LLC, a divorce financial strategy firm that exclusively works with women, who are going through, or might be going through, a financially complicated divorce. He also advises women business owners on what steps they can take now to "divorce-proof" their business in the event of a future divorce. He can be reached at [e-mail].

All articles/blog posts are for informational purposes only, and do not constitute legal advice. If you require legal advice, retain a lawyer licensed in your jurisdiction. The opinions expressed are solely those of the author, who is not an attorney.

Follow Jeffrey A. Landers on Twitter: http://www.twitter.com/Bedrock_Divorce

 

Follow Jeffrey A. Landers on Twitter: www.twitter.com/Bedrock_Divorce

Comments

[Barbara0817]

02:43 AM on 06/11/2011

Why is there so much divorce now days ? Because Peolpe love Themselves the most and dont show love to Thier partners . They should start teaching classes in High school about how to be married . and How to treat other people well.I dont undestand what is wrong with some of these people. Maybe if They were more careful about Who They married They wouldnt have to go through Divorce.

[roudy]

10:41 AM on 05/28/2011

Nothing about the man protecting his retirement assets. Same old " Whats mine is mine and what's yours is mine."

[TaxpayingVoter]

08:51 PM on 05/29/2011

I was the only one in either of my marriages to either work or have retirement assets. Fortunately, both men were idiots and didn't show up for the divorce proceedings. I was able to keep all my assets without having to give them anything.

[mariclau]

06:48 PM on 05/27/2011

Could not agree more that marriage is about love and divorce is about money. When it was apparent divorce was inevitable due my exes affair, I told him it was now all about money. Of course, that made me a bad person who had always been in it for the money. Never mind that when we started dating he was a poor teacher. Anyway I am guessing the new wife was a little surprised when there wasn't as much money as she thought once I took my share. Ah that was fun.