Continuing this series, we’ll now discuss how to keep your retirement savings safe from derailing if you and your spouse get a divorce later in life. We know that divorce can take a toll on the finances, especially when those finances are now split between both parties. So, the more assets you can protect, the better. Here’s what you can do to protect your retirement savings when faced with this dilemma.
Divide your assets
Before you can split your retirement accounts, you first need to know how much money you actually have in there. You can gather summary plan descriptions for employer-sponsored accounts. This includes your 401(k) and pensions. On top of your 401(k) and pensions, it’s important to include any real estate, IRA balances, savings accounts, and other assets you may have.Once you have the numbers figured out, you can start dividing each account fairly.
Recalibrate your spending
Your wallet will definitely take a hit in the event of a divorce. With the absence of an entire income, paying even the smallest bill could seem like a hurdle. You might question if you’ll even have enough money left in your retirement to provide for you a few years down the road. But one way you can ensure that more money goes into your retirement fund is by cutting costs.
If you and your spouse agree to sell the house you shared when you were married, and you moved into a cheaper place or rented, you could add a substantial amount of money to your retirement.
If you’re over 50, you can even take some of the extra money you made from selling the house and make catch-up contributions to your 401(k).
Take a look at social security benefits
If you and your ex-spouse were married for 10 years or longer, there’s a chance you could be eligible to some of their Social Security benefits, even if they get remarried. If you have your own Social Security benefits, you can either take yours or your portion of your ex’s benefits–whichever one is larger. Of course, you’ll have to be 62 years old before you even qualify for the monthly withdrawals.
Seek professional presentation
Divorces can cause headaches unmatched by anything else. Figuring out how to split assets, and trying to keep track of finances and court costs can leave you feeling overwhelmed. Taking on this heavy load by yourself won’t make things any easier. Furthermore, divorcing spouses who are unfamiliar with how pensions and 401(k)s work may risk losing valuable assets. That’s why it’s important to find an experienced divorce lawyer who can help you with the intricacies surrounding retirement and divorce.