How Divorce Could Delay Your Retirement Plans
Those individuals close to retirement age need to be especially careful when considering how to divide their marital property.
Most people thinking of retirement are focused on making sure that they have enough money to live off of once they stop working. They have taken the time to prepare their investments so that they can earn as much as possible before they have to rely on these funds.
While these steps can help ensure a more positive financial future, not everything will always go according to plan. In some situations, these individuals may find themselves facing the prospect of divorce. They are sometimes surprised to learn that under Texas law, their retirement assets could potentially belong to both spouses if they were accumulated during the marriage. This is true no matter which spouse actually contributed the money to the funds.
Texas divides marital assets according to community property laws. This results in both spouses receiving a portion of the assets that were earned during the marriage. In many cases, this often means that the retirement accounts of the couple will be a major issue that will need to be resolved in order to find a property division agreement. The spouses may have to develop extremely creative approaches when considering these accounts, especially if one is close to retiring.
When dividing these assets, it is important that the individuals understand some of the terms associated with these funds. Often, plan administrators will levy substantial penalties if the money is distributed prior to the individual reaching retirement age. This may result in the funds being withheld until the spouse retires, at which time a portion of the money will be released to the other spouse. Developing a plan on how to deal with this issue is a crucial step when helping individuals prepare for some of the financial changes they will experience once the divorce is official.
If you are thinking of divorce and are close to retirement, it is essential that you take the time to understand how your divorce will possibly change your retirement plans. You may have several questions specific to your situation, and it is important that you receive advice that is focused on your needs and concerns.
You should reach out to an experienced family law attorney to ensure that you have someone on your side throughout the divorce. You might feel extremely worn down by all of the emotions involved in the ordeal, and this can impact your decision-making abilities. You need to be absolutely clear that you are doing everything you can to protect yourself at this time. A poor choice could result in severe financial hardship, which could substantially delay your retirement.