Tips to protect your retirement goals during divorce

 Posted on November 02, 2017 in Divorce

Divorce impacts your financial goals in many ways. Are you properly planning for life after divorce? The answer is likely no. Many couples get divorced every year in Illinois. Like most couples, you are probably concerned about the impact divorce will have on your finances, including your retirement plans.

You can take steps now to prepare for your divorce and the division of your assets. It is important to work closely with your divorce attorney to create a strategy that will protect your interests. However, understanding the basic issues that may arise during your divorce when it comes to your retirement can go a long way in protecting your future.

Steps to take during divorce

What do you need to know about dividing retirement accounts? Here are the steps you can take to help you prepare for divorce negotiations:

• Determine the amount of money in your accounts. This includes employer-sponsored retirement accounts, pensions, personal retirement accounts, savings accounts, CDs, money markets and other financial assets.
• Determine which retirement accounts will be included in a Qualified Domestic Relations Order and if you should roll any 401(k) funds into another account.
• Consider how retirement accounts are taxed. Some retirement accounts will be taxed as regular income when you withdraw money while others have already been taxed. It is important to take this into consideration so you receive your fair share of retirement funds.
• Consider how Social Security benefits will play a role in your retirement plan. Marriages that last 10 years or longer allow spouses to claim benefits from the ex-spouse, even if they get remarried. You will need to meet eligibility requirements to receive monthly benefits so it is important to take this monthly withdrawal into account when determining how to divide assets during divorce.

The importance of planning for life after divorce

Careful planning can go a long way in the outcome of your divorce settlement. In addition to getting a clear picture of your retirement accounts, you should also create a new budget for life after divorce. You should consider getting a new bank account and credit cards to give yourself a fresh start. You should also look at how your retirement goals are ultimately impacted once your divorce is finalized and create a new financial plan that fits your lifestyle.

Life after divorce is complicated, but your financial plan does not have to be. Working with your attorney throughout this process can help you learn about your options and have a plan in place on your divorce is finalized.