What happens to your retirement during a divorce?

What happens to your retirement during a divorce?

| Dec 29, 2020 | Firm News

Getting divorced in North Carolina may create doubt about your financial security. Even more concerning is the impact that your split will have on your retirement savings. 

Understanding the factors that impact the outcome of your retirement can help you determine your next course of action. Likewise, knowing how to start over again can protect you from making costly mistakes that could disrupt your plans for the future. 

Determining an outcome

What happens to your retirement accounts may look different depending on several factors including how long your marriage lasted, the depth of your retirement accounts and the type of investments you have. According to U.S. News, elements that influence the outcome of your retirement accounts include the following: 

  • Implementation of preexisting agreements 
  • The strategy of your divorce settlement 
  • State law requirements 
  • Specific details unique to the contracts you signed for retirement accounts 

Looking ahead

Planning for your future when you still do not know what your future holds can bring unique challenges, but the sooner you begin the better off your outcome in the long term. If your retirement account is equally split between you and your spouse, refrain from withdrawing your share of the funds especially if you have an IRA or 401k. Rather, utilize the help of a professional and roll your portion over into a new retirement account in your name. 

Begin saving right away and budget your money wisely to set aside a little extra each month to put toward retirement. Diversify your savings where possible to build compound interest which will maximize the value of your money. Use care in moving money around from your shared retirement accounts even after your divorce settlement to avoid costly penalties for going against the contract you originally signed.