Divorce destroys lives every day, there’s no two ways about it. It’s a horrible thing to go through for all involved parties, but it can get even worse when you have to divide assets between the partners. Many people are utterly shocked when they find out that their retirement benefits, which they’ve worked hard for their entire lives, are suddenly on the line as marital property.
Divorce can ruin your retirement and turn what was supposed to be your quiet golden years into a time of struggling to make ends meet. Learn how your late-life divorce and retirement benefits can be closely tied together, and how to protect your benefits from the dissolution of your marriage.
Federal Employees, Divorce and Retirement Benefits
Divorce is one of the top five things that can financially ruin your retirement. This is particularly true for federal employees who rely on their pension. Many people are shocked to discover that these benefits are considered marital property and subject to division in divorce.
Private Pension Plans
There are a number of things that can happen with private sector pension plans. One spouse can buy out the other. They can agree on a share of the benefits. The courts can also divide it up based on perceived need. Usually the maximum allowance for a spouse is 50% of benefits awarded, but this can be as high as 100%. Know your rights.
401(k) Plans and Divorce
Retirement plans like 401(k) plans or IRA balances can be awarded entirely to one or the other spouse, or can be divided up. Individual courts will differ on how they approach these things, but it’s generally best to agree on a percentage division rather than a fixed dollar figure, as market swings can have a significant impact if you are not awarded the investment gain or losses as part of the division.
In general, savings that you put into your retirement before you got married are not subject to division in divorce. It’s vital to carve that part off of your total retirement savings value (along with the increase in value during the marriage) and keep it separate. Your entire retirement account may not be fully marital property, which can decrease the amount you have to pay out.
Protecting Your Retirement Benefits
As you can see, divorce and retirement benefits are linked, and you can stand to lose a lot as a result. The best way to ensure your retirement benefits are protected and minimize your losses is with the help of an experienced divorce attorney. If you find yourself in this position, the Willick Law Group can help. Read about Nevada divorce laws, and contact us for a consultation on your case today.