Divorce is one life event in the Salt Lake City area that can affect all areas of your life long after it is over. In all of your haste to finalize things, the one thing you do not want to overlook is your retirement savings. You worked hard to earn and save them, but now that you are ready to leave your spouse, you learn he or she wants half.
You may not feel your ex deserves to receive a dime of your retirement funds. Assets become fair game in divorce. Even though your spouse did not contribute towards your retirement funds, the funds are marital property. In equitable distribution states, retirement funds are not always split in half. Division occurs according to what a judge deems fair. Take some time to review the following steps you can take to protect your retirement.
Get a full accounting of the value
You may be in the habit of periodically checking your retirement statements to know what you have saved up. During a divorce, you cannot afford to guestimate the value. Take a full inventory of all your retirement accounts so you know how much negotiating power you have.
Come up with an agreement
Unless you can get your partner to accept an offer, you may have to give him or her a portion of your retirement savings. Ask your partner to consider other assets to reduce the amount of their share in your retirement accounts.
Know the tax implications
Nothing reduces a retirement account's value more than taxed distributions. If your divorce settlement includes payments to your ex-spouse, you could end up overwhelmed by the taxes and fees. You may want to consider working with a financial advisor or attorney to help you determine the best way to split your retirement accounts with minimal loss to you.
Because you are separating from your partner, chances are your household income is going to decrease for a while. This may affect the amount of money you can add to your retirement accounts. Consider how much income you need to replace it. You may need to downsize, make lifestyle adjustments and take on another job so you can build your retirement savings back up after a divorce.