If you’re considering a divorce, you may be worried about the status of your retirement plans. You don’t want to suffer such financial losses that you no longer can retire on your own schedule.
This is often especially an issue for gray divorce, which involves those who are 50 years old and older. But it can really be something that couples want to address at any age. How can you protect your funds?
If you’re worried about your ex taking your retirement funds
Let’s start with a scenario in which you’re concerned that your ex is going to get a disproportionate amount of your retirement funds in the divorce. The best way to protect against this is to use a prenuptial agreement before you get married. You can specify that those retirement funds are supposed to stay with you alone, and your spouse can relinquish their claim to any of those assets.
If you’re already married, then you can’t use a prenup, but you may be able to use a postnuptial agreement. This can accomplish many of the same goals, but it is important to know that your spouse still has to agree with it, so this is probably not a viable solution if they’ve already filed for divorce.
If you’re worried about losing your spouse’s benefits
On the other hand, maybe your spouse is the one who has a retirement plan or a pension plan. You’re worried that you’re going to lose out on the benefits you’ve been planning on for decades.
One of the best ways to address this is with a Qualified Domestic Relations Order, normally known as a QDRO. This order can be used to divide future pension plans and retirement plans. It legally sets up a situation where you are given a specific percentage of each one of those payments. Once this has been addressed in the court order and the divorce agreement, your ex has to pay you once they start collecting those benefits.
Keep in mind that the QDRO may not give you a full half of the pension payments or retirement fund. It depends on how long you were married and how long your ex worked at that job. But it can still get you something so that you’re not left with no options.
These are just two areas to consider if you’re thinking about the financial side of your divorce and what it means for your future. Please be sure that you understand all of the legal tools you have at your disposal.