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How will divorce impact your retirement?
How will divorce impact your retirement?

How will divorce impact your retirement?

On Behalf of | Oct 7, 2024 | Divorce |

If you are getting divorced, you certainly want to think about the financial impact on your future. This is especially true if this is a gray divorce, meaning that you are over 50 years old. At this age, you’re getting closer to retirement, and you may be concerned that ending your marriage is going to negatively impact your ability to retire.

It certainly is true that divorce can have an effect on retirement and on a person’s finances. Below are two areas that you want to consider at this time.

Creating a post-divorce budget

First and foremost, it’s important to start by making a new budget that accounts for your new financial realities. You may find that your standard of living goes down after divorce, as you now have to personally pay for costs that you used to split with your spouse – such as mortgage payments or utilities payments. Making a new budget can help you see when you can afford to retire and what standard of living you should expect. You may have to adjust your retirement plans.

Using a QDRO

Another thing to remember is that you may be able to divide retirement benefits with a qualified domestic relations order (QDRO). Even if your ex is the one who is listed on a 401(k) or a pension plan, you may deserve a portion of those future payments. When the court issues a QDRO, it splits up the retirement benefits and tells you what percentage of the payments you should expect.

These are simply two areas to start with when going through a divorce and considering your finances. Be sure you know exactly what legal options you have.

 

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