Given all that divorce involves, it’s not surprising that some people might take a “first things first” attitude. As couples attempt to sort out the details of their separate lives for the period of time immediately after divorce, it may be easy to lose sight of the long term.
As individuals are in their prime working years, there’s a good chance that they are accumulating retirement assets, such as pensions or 401(k) plans. This is obviously collected as a nest egg for their golden years. However, many people probably base financial plans around life as a married couple. As such, divorced individuals may have to completely re-imagine their post-divorce finances as it relates to retirement.
A study from the National Center for Family and Marriage Research shows that the divorce rate among people 50 or older has grown by two times since 1990. If individuals in this age group forget to pay too much attention to retirement assets during divorce, they could run into trouble. After all, as people get closer to retirement, they have less time to make a back-up retirement plan if circumstances change.
Keeping all of this in mind, divorcing couples may need to be on top of retirement assets from the very beginning of divorce proceedings. Generally speaking, retirement assets acquired by either spouse during the course of marriage are likely to be considered shared property. As such, they would be subject to equal division under California’s community property laws.
Once a divorce is finalized, it’s not simple to go back and revise the terms — especially if there is no fraud or deception involved. As such, it’s important to be proactive and make long-term plans, even though people may simply want to wrap up their divorce quickly and move on.
Source: The New York Times, “The Blow to Retirement Plans From a Late-in-Life Divorce,” Constance Gustke, June 27, 2014