Divorce and your retirement savings.
In a recent study by researchers at the University of Connecticut, Social Security Administration, and National Institute of Aging they looked at the Census Bureau and Social Security data for the 40-year period from 1968 to 2008. They compiled over 2,000 women who divorced from 1968 to 2008. When looking at the data, the results were surprising. Those divorced spouses who were forced to enter into the work force were able to save more for retirement years than those who remarried.
During marriage today couples need to save for retirement individually which is a different mindset than in previous years. In the years pre 1970 women who stayed at home did not save for retirement and instead depended upon their husband’s savings plan for their retirement. The issue that arises is when that long term marriage ends and the woman has to seek out legal help to get a portion of her husband’s retirement so that she will have some savings later in life.
Married couples who have a plan in place for the wife or husband to stay at home with the children need to formulate a separate savings plan for retirement. Even the stay-at-home spouse needs to be able to contribute to their own retirement account. This new financial way of thinking has now been considered the better option. Then when faced with divorce each party has their own retirement funds and the need to divide one spouse’s account is lessened especially in cases where they have even amounts saved and there is not fault in the marriage.
This new financial planning comes on the heels of the study where it was proven that when stay-at-home spouses are forced to enter the work force following divorce, they become financially savvy with savings for retirement. The now employed spouse has to start fresh most often times with no savings at all. Only those couples in a long term marriage are those divorcing couples who are looking at separating a retirement account through divorce. In Alabama a long term marriage is considered to be a marriage over 10 years. That definition sometimes hurts those couples who live together, raise children together, act as married couples for several years and then decide to formalize their marriage. The date of marriage then becomes the yard stick at calculating the number of years. The disadvantage comes in when a spouse has been with their spouse prior to marriage for many years. Those years are not counted toward that 10 year mark. If then they were not financially savvy enough to save for retirement, they are starting a new post divorce life with no retirement funds.
In the world of divorce, it is vital that you seek legal advice when it comes to the division of assets and financial accounts. Dividing financial accounts and assets that can turn into a retirement benefit can be very litigious. Having the right attorney can make the difference in your post divorce retirement funds. Judge’s have the power to enter Orders that divide retirement accounts and ensure no tax consequences for either party if they are rolled over into another retirement account. Our attorneys have experience with long term marriages and the financial impacts that divorce creates on those spouses. We have tools to assist you complete your financial picture with a real solution to your divorce issues. Call us today (205)623-1001 to get real solutions. We have great resources on our site at https://www.birminghamdivorcefirm.com