5 Things to Know About Planning for Retirement After Divorce
By: Gordon & Perlut, LLC
Planning for retirement after a divorce can be incredibly complicated, particularly if you are approaching the age of retirement. For most married couples, divorce will result in short-term financial difficulties, but most parties are able to recover over time.
Financial recovery can be more difficult for parties who are ready to retire or for those parties who retired recently. Those retirement benefits you are counting on might not actually be fully available to you if they are divided in your divorce. An article in U.S. News & World Report discusses some ways divorcing spouses can “retool” their retirement plans after a divorce. We want to provide you with some of that information. The following are five (5) things to know about planning for retirement after your divorce.
1. Determine Whether Your Retirement Benefits Are Likely to Be Divided in Your Divorce
Before you begin reassessing your post-divorce retirement planning, you will want to know whether the court is likely to classify retirement assets as marital assets (or separate assets), and thus whether those assets will be divisible in your divorce case. If retirement benefits were earned prior to the date of your marriage or have been excluded through a prenuptial agreement, your post-divorce retirement planning might not need to look so different or may look quite different (depending on your situation).
2. Work with a Lawyer on a Qualified Domestic Relations Order
If retirement benefits are divided in your divorce case, whether you are anticipating you will need to have some of your benefits distributed to your spouse or you will receive assets from your spouse’s retirement accounts, you need to be certain you work with a lawyer on a Qualified Domestic Relations Order (QDRO) in most circumstances to avoid penalties associated with early withdrawals.
3. Learn About Spousal Social Security Benefits
You may be eligible to receive retirement benefits based on your spouse’s Social Security if you were married for a long enough period. If you were married for more than 10 years and you are unmarried when you reach retirement age, you can be eligible for those Social Security benefits through your ex-spouse.
4. Create a New Budget in Order to Save Money
Create a budget as soon as possible so you can begin saving money for retirement even before your divorce is finalized. You may need to adjust to living on less money than you were living on during your marriage.
5. Add to Your Savings Account While You Are Waiting for Your Divorce to Be Finalized
If you can, add to your savings as soon as possible once you have separated from your spouse. Every little bit helps.
Contact a Retirement Benefits Lawyer in Chicago
The process of planning for retirement after divorce can be frustrating and complex, and you may need to live more frugally for a certain amount of time until you are able to rebuild your retirement accounts accordingly. In the meantime, an experienced Chicago divorce attorney at our firm can help you to understand the ways divorce can affect retirement planning, and we can look at your specific circumstances to help you plan ahead. Contact Gordon & Perlut, LLC today to get started.