Divorce is a life-altering event with both emotional and financial challenges. Like many others, you may feel concerned about safeguarding your retirement assets.
Therefore, you should understand the strategies and precautions that you can take to protect your retirement savings when you face a divorce
Understanding your retirement savings
In 2021, 689,308 people experienced the financial challenges of divorce, including divisions in their retirement savings. Start by getting a clear picture of what retirement savings you have. Look at statements for your retirement accounts, pension plans and investments. Also, calculate your spouse’s retirement accounts.
Understanding state laws different
Minnesota is an equitable distribution state. Therefore, the courts do not divide marital property evenly between the spouses. Other states split property equally, while the judge determines the property division in equitable distribution states.
Keeping communication with your spouse open
During a divorce, talk openly with your spouse. Discuss how you will divide your retirement savings. If you can agree on a fair plan, you can save time, money and stress. A financial advisor or mediator for guidance can provide valuable advice on how to protect your money and plan for retirement after the divorce.
Maintaining your accounts
If you decide to divide your accounts, use a qualified domestic relations order. A QDRO is a legal document that helps split retirement accounts like 401(k)s and pensions without penalties. Review and update the people who will get your retirement savings if you pass away. Make sure it matches your post-divorce wishes.
Creating a new financial plan
Your financial situation will change after a divorce. Make a new budget, investment strategy and plan for your retirement. Also, monitor your credit reports and work to maintain good credit during and after the divorce.
Negotiation and robust information will best protect your retirement accounts.