While any divorce can be devastating, financially as well as emotionally, the fact remains that too many people undercut their futures by not being prepared for what lies ahead in the divorce process. This is particularly true in the "gray divorce", or divorce after 50. If unprepared, a divorcee could find their retirement plans sabotaged by the separation.
Here are six tips to keep your retirement intact:
- Talk to a financial planner. Even if the divorce papers have yet to be filed, you cannot prepare enough. If you talk to an expert, you can know what you need for retirement, how you or your spouse's funds operate, how tax laws play into the matter, etc.
- Remember that retirement plans are worth more than your house. That is, if your choice is between keeping your marital home and keeping your retirement plan, go with the retirement plan. Liquid assets are worth more than the risks and expenses of owning a property on your own. Ideally, you and your spouse can put the house on the market and divide the profit.
- Don't withdraw too much right away. While there are ways for you to withdraw a substantial amount from a former spouse's 401(k) or 403(b) and avoid a tax penalty while doing so, you want to withdraw only what you currently need. That way, you can keep the fund for when you actually retire.
Remember that retirement funds are worth more than alimony. Again, it can be too easy to lose sight of how important certain assets are in the long-term compared to the short-term. Generally speaking,
spousal maintenance can be more temporary, plus it's taxable.
- Know which retirement plans are more important. If you have a Roth IRA and a 401(k) on the table, or a Roth 401(k) versus a traditional IRA, you should pursue the Roth IRA or the Roth 401(k) before you ask for the other plans. That is because these funds will not be taxed when you withdraw them.
- Know what Social Security benefits you're entitled to. You might qualify to collect a portion of your ex's Social Security, whether or not he or she has married someone else since.
Of course, knowing what you want is quite a different matter from knowing how to obtain it through a complex legal procedure. If you are facing divorce after 50, you need to make sure that you have a smart divorce lawyer at your side, someone who is able to protect your future.
Feel free to reach Meyers Law Group, P.C. today to discover how a Long Island divorce attorney from our firm can provide the legal skill and care that you deserve.