How Divorce Affects Retirement Planning and What You Can Do About It
Going through a divorce brings significant changes to every part of your life, and retirement planning often gets pushed to the back burner. The financial decisions you make today will directly impact how you live during your golden years.
Collaborative divorce provides a significantly more peaceful alternative to traditional court litigation. Instead of battling it out in front of a judge, you and your spouse work together with neutral professionals to find creative solutions that work for both of you. The collaborative process encourages transparency and creative problem-solving, which is simply not possible in a courtroom setting. Instead of fighting over assets, you’re working together to build two separate but secure financial futures.
During collaborative divorce, you’ll meet with a neutral financial professional who specializes in untangling complicated money matters. A financial neutral helps you understand exactly what you’re working with and explores fair ways to divide everything, including your retirement accounts.
Think about your current retirement picture. You’ll need to assess all your accounts – your 401(k), IRAs, CDs, and Social Security benefits. Don’t forget about pension income streams, which can be tricky to navigate during divorce. Retirement funds accumulated during marriage are typically considered shared assets. However, if you had retirement accounts before getting married, those pre-marital portions might be handled differently from what you saved together.
You’ll also want to understand what happens if either of you remarries down the road. Will your ex-spouse continue receiving benefits from your retirement? These details matter more than you might think. Being proactive now, especially with guidance from a neutral financial professional, means you can develop realistic retirement goals and timelines for your new chapter in life.
When you utilize the Los Angeles Consensual Dispute Resolution Family Law Association, you can rest easier because you will know that when your divorce is finalized, each party involved, including your children, will be better prepared to face the future with confidence.
Call us today if you would like to learn more about how our LACFLA members can help you and your family through your divorce!
Note: This information is general in nature and should not be construed as legal/financial/tax/or mental health advice. You should work with your attorney, financial, mental health or tax professional to determine what will work best for your situation.