Divorce can bring just about every emotionally disturbing facet of your life to the forefront, and many common divorce issues revolve around one of those: money. Divorce is often about money, as both a cause, a factor, and as a potentially very contentious part of the divorce proceeding itself. If you fail to properly give this issue its due attention, you could be making some severe errors in judgment that will affect you for a very long time. Read on to learn more about how to keep from making some serious money mistakes that might come back haunt you in your later years during divorce.
Don't neglect your retirement
No matter how old you are, the sooner you begin thinking about your retirement years, the better prepared you will be. While it may be difficult to believe, your divorce could end up creating two major benefits when it comes to dealing with your retirement years. If you fail to take advantage of them, however, it's your loss.
QDRO (Qualified Domestic Relations Order)
This often overlooked divorce benefit can help pave the way for a healthy retirement fund, or at least add to your current fund. The funds in your spouse's retirement are considered marital property, regardless of the fact that you never contributed to it. The law makes provisions for spouses who may have had to stay home and care for children or give up educational opportunities for the family needs, and the QDRO is one of those. This order, signed by a judge during your divorce process, allows the owner of the retirement account to transfer funds to you and to avoid paying any penalties for that transfer. This money can then be rolled into your own account before tax time since it may be considered income otherwise.
The Social Security divorced spousal benefit
If you and your spouse have been married at least 10 years, you are automatically entitled to receive one half of that spouse's retirement benefit when you reach full retirement age. You will receive the benefit that is the highest of your own benefit or half of your spouses. If you have not earned as much money as your spouse during your lifetime, the spousal benefit could produce a considerable bonus for your retirement fund. If you have not been married 10 years, but are close to that point, you might consider holding on a bit longer if it could mean a big difference in your retirement planning.
Contact a company like Karen Robins Carnegie PLC for more information and assistance.Share