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Will your decision to divorce prevent you from retiring?

It takes decades of intentional saving and careful planning to fund a comfortable retirement. You and your spouse may have spent decades during your marriage slowly accruing retirement savings. The money you have set aside might be in an employer-sponsored retirement account or an account you hold separately.

Those savings may be among your most valuable assets, other than a business owned by the family and real estate holdings. Especially for those acclimated to a comfortable standard of living, there may be concerns when considering divorce that the expenses involved and a division of marital property will mean that neither spouse can retire.

What happens to your retirement savings in a Texas divorce?

Unless you have an agreement, community property laws apply

Some spouses have marital agreements discussing how they will split their property in the event of a divorce. Retirement accounts are among the assets that people frequently try to protect with prenuptial agreements.

If you don’t already have a contract with your spouse that discusses your retirement savings, then you either need to divide them yourself or go to court. In court proceedings, community property laws would apply. You can expect that whatever you saved for retirement during your marriage will be subject to division. Even if the retirement savings are in employment benefits, they are part of your community property, and you will have to split those retirement savings.

While you might reduce the account due to community property rules, you at least won’t have to worry about losing more to penalties and taxes, as a properly executed qualified domestic relations order (QDRO) can help you split the account without penalties.

You can still retire if you adjust your plans

Dividing your retirement account doesn’t innately mean that you will be unable to retire. It just means that you may have to make some changes to your plans. Working for a few more years, reducing your expenses by living with family and looking into ways to develop passive income streams during retirement are all ways for you to recoup the savings lost in a Texas divorce.

Considering the long-term impact of a high-asset divorce to help you plan for a comfortable future after the end of your marriage.