Long before they retire, many couples have plans or at least ideas for how they would like to spend their retirement. This often includes thoughts of travel, taking up new hobbies or even starting a new business. These kinds of goals require significant planning, which is where retirement funds come in. Unfortunately, the prospect of divorce can quickly derail those plans.
A couple seeking divorce in the months or years immediately preceding their planned retirement should be aware of the potential divorce has for devastating retirement goals. This is mostly because New York law considers any funds a couple accumulates during their marriage as joint assets. Retirement accounts are often on the table during property division.
Options for protecting your future
Professionals, such as physicians, attorneys or engineers, likely have significant assets set aside for retirement. Likewise, business owners in the IT world, construction, finance or other areas may have planned to use their business as a retirement asset. In either case, the spouse with fewer individual assets at divorce may be entitled to more of the marital assets, including portions of the other spouse’s retirement savings.
Asset division in divorce often means significantly lower retirement funds than either spouse planned on. Spouses might have to revise their goals, lower their standards or postpone plans to retire. Another option is for one spouse to offer different assets to the other, such as the house or savings account, in order to keep the retirement accounts intact. With shrewd negotiation, it is possible to avoid financial struggle after a divorce and stay on track with a healthy retirement plan.