Couples in Missouri who get divorced often suffer negative impacts to their retirement accounts, especially if they're not properly prepared for a divorce. Statistically, individuals who have gone through a divorce are more likely to use up their assets during their retirement than married couples.
With the help of an experienced Missouri divorce lawyer, you can better understand the effects divorce may have on your retirement accounts, as well as prepare yourself and your finances to prevent unnecessary damage.
When you are married, you plan for retirement with your spouse's income in mind. Whether it is a combined income household or one income household, there is a reliance on that expected income. When things change, so must the financial planning involved in preparing for retirement.
The Issue of Equitable Distribution
During the divorce process, all marital assets are divided through a process known as equitable distribution. Generally speaking, all assets acquired during the pendency of the marriage are subject to fair distribution. This includes retirement accounts, in most circumstances.
Even when funds are held in only one spouse's name, the assets contained in the retirement account may be distributed between the parties.
Planning for the Future
In getting ready for your future life while separated, you should consider the impact on your income and how that will affect your eventual retirement goals. In many cases, programs such as deferred compensation or contribution matching may go by the wayside, as you need the income to pay for everyday expenses you did not have while married.
This may be especially true with the addition of spousal support (alimony) and child support payments, which will take a significant chunk of your income if it is ordered by the court. There will be added expenses in maintaining two living places as well, further stealing from your ability to contribute towards retirement.
Keeping Retirement on Track
Keeping your retirement plans on track as much as possible is crucial to your long-term financial health. With careful negotiation and planning during the divorce proceedings, or through a structured settlement, you can make decisions that better enable you to protect your retirement accounts.
- Protect What is Yours: Compromise can be a friend during the divorce process, but never just "give it up" in order to get through things quickly. Your assets can often be divided in such a way that still makes the parties happy but doesn't destroy your retirement.
- Consider a "buy out": In many cases, early withdrawal of funds from your retirement can create steep financial penalties. Sometimes, it is better to give up other assets or "buy out" the other spouse's portion of the retirement. This keeps the money in your account, building for the future.
- Consider Tax Implications: Certain tax implications can result from withdrawal of retirement funds, as well as the structure of your retirement contributions. Your Missouri divorce attorney can help protect your assets from severe tax treatment.
Consult a Missouri Divorce Attorney
If you have questions about your retirement plans following divorce or need an attorney to represent you in your divorce proceedings, experienced Cass County attorney Joshua Wilson is here to make sure your assets are protected as they should be.
Contact the Joshua Wilson Law Firm today at (816) 331-9968 for a consultation.