Even though the overall rate of divorce decreased over the years, divorce among people over 50 increased significantly. Bloomberg, the U.S. News & World Report and many other sources report that elder divorce can significantly impact your finances – especially your retirement savings.
However, no matter your age, your retirement is important. You save up for your retirement throughout your entire career, which makes it a significant asset for your future. In fact, it is one of the most valuable assets we own, but individuals often overlook it when it comes to a divorce.
You might wonder: does your spouse have a right to your retirement when you divide property?
Will your spouse get some of your pension in your divorce?
Most of the time, the answer to that question is yes, unless spouses have a prenuptial agreement specifically stating otherwise. However, in most cases, assets added to your retirement during the marriage are often considered marital property, while anything you added before the marriage remains separate property.
Like all other marital property, the division of your retirement assets depends on certain factors, including:
- The length of your marriage;
- The value of the retirement assets;
- The contribution each spouse made to the asset; and
- Each spouse’s financial needs and circumstances.
However, you must divide these assets with great care.
Take note – dividing retirement assets can be complicated
There are several reasons why you must be careful when dividing retirement assets, including:
- Calculating the value of your retirement assets, as well as differentiating separate and marital property out of those assets, can be complex; and
- Dividing retirement assets requires a specific process and documentation to avoid tax or financial penalties for reaching into your retirement account before retirement age.
Mistakes could not only put your assets at risk but also your future in retirement.
You should take time to understand the details of your pension or retirement accounts, so you can better preserve your hard-earned assets during your divorce. It is often helpful to speak with an experienced attorney to ensure you take the proper steps to protect your property during divorce.