Couples in Virginia who worked hard for decades at their place of employment look forward to the day they are able to retire. However, sometimes life throws a curve ball, and a couple divorces before they are retired. This could have a significant impact on their retirement plans.
For example, before the divorce they were planning on having shared finances during retirement. Moreover, they may have planned to continue living in the marital home, especially if it was paid off, and they may have been counting on staying on their partner’s medical plan. However, after a divorce, they will have to plan on relying only on their own retirement income, although they may receive spousal support. Moreover, they will have to decide whether to keep the family home, remembering that the home still needs to be maintained and taxes must be paid.
In most states retirement funds that accrued while the couple was married will be considered to be marital property, and thus will be subject to property division, even if they are in one spouse’s name only. However, retirement funds that had accrued prior to the couple’s marriage will not be considered to be marital property.
In addition, sometimes a person needs to take a leave from work to deal mentally with the divorce. This could have an effect on the person’s income and therefore on the person’s retirement funds. Moreover, a person who gets a divorce may find that they have to push back their retirement date and continue working, in order to let more retirement funds continue to accumulate.
As this shows, while divorce can put a wrench in one’s retirement plans, it is not always a terrible situation. While it may mean that one’s retirement plans must be changed, it is still better than staying in an unhappy marriage. Those who are wondering how their retirement accounts will be treated in the event of a divorce may want to seek the advice of an attorney.
Source: Forbes, “Does Divorce Derail Retirement?,” Christina Gann Munguia and Paola Ramos, July 24, 2017