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Three Tips For Protecting Your Retirement Goals During an Illinois Divorce 

Posted on in Divorce

wheaton divorce lawyer Divorce is notoriously difficult on personal finances. In addition to the expense of the divorce process itself, such as attorneys’ fees and filing costs, divorced spouses must divide their marital assets and begin supporting themselves on only one income. Pensions, retirement plans, and savings accounts are critical assets that are often pursued by both spouses, especially if one spouse has remained unemployed to care for children. Add this to child support and spousal maintenance, and a divorcee’s future financial prospects might seem pretty grim. 

Although divorce almost always presents financial challenges, there are things you can do to protect your retirement prospects in divorce. Here are three suggestions for navigating your divorce with a long-term financial perspective. 

Understand the Rules that Govern Your Retirement Plans 

Not all retirement plans and pensions are the same. Many have specific rules and procedures that need to be followed when accounts are divided during divorce. Even if a divorce decree awards all or some of a retirement or pension account to a spouse, failure to abide by the procedures may cause the entire asset to be forfeited. For example, a Thrift Savings Plan (TSP) is a defined-contribution plan for certain government employees. TSPs must be clearly divided in a divorce decree, and a Qualified Domestic Relations Order for other retirement plans cannot be applied to a TSP. If the divorce decree does not clearly specify that a spouse is entitled to a portion of the TSP, that spouse cannot receive any portion of the funds. 

Understand Your Social Security Benefits 

Spouses who have been married for at least 10 years may be entitled to a portion of each others’ Social Security Benefits. If one spouse earned a higher income and has greater benefits, the spouse with the lower benefits can collect, at most, an amount equal to half of the higher-earning spouse’s benefits. An individual can only collect benefits for one person, so it is important to understand your likely benefits and factor them into your retirement plan. 

Hire the Right Financial Experts

Although divorcing individuals may be loath to have yet another expense, hiring great financial experts during divorce can end up saving you a lot of money in the long run. Here are just a few of the things financial experts can help with during divorce: 

  • Keep you focused on a long-term perspective rather than settling for a short-term lump sum that looks good but might not be the best option

  • Explain the tax implications of a given divorce settlement 

  • Advise you on investment allocation and management

  • Ensure your paperwork is properly sent to your retirement account managers 

  • Help you improve your credit so you can refinance debt at an advantageous interest rate 

Schedule a Consultation with a Wheaton, IL Divorce Lawyer

Understanding how marital asset division, debt division, and tax implications affect you during divorce is a crucial part of creating a divorce strategy. At The Stogsdill Law Firm, P.C., our experienced DuPage County divorce attorneys are skilled at helping clients create a holistic plan for divorce that considers both short-term and long-term goals. To find out more, schedule a confidential consultation by calling our offices today. Call 630-462-9500

 

Source: 

https://www.ilga.gov/legislation/ilcs/ilcs4.asp?DocName=075000050HPt%2E+V&ActID=2086&ChapterID=59&SeqStart=6200000&SeqEnd=8675000 

https://www.investopedia.com/articles/investing/072915/how-protect-your-retirement-after-divorce.asp 

 

 

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