Divorce With Respect

How does divorce affect retirement plans?

A divorce can affect retirement plans in a number of ways and it is important for people to keep these effects in mind.

Many couples in Sacramento dream of the day when they can retire from their jobs and travel, spend time with family and enjoy the finer things of life. However, when a couple divorces, retirement plans can be dramatically affected. This is especially true for couples who are dissolving a long-term marriage and may be approaching retirement age.

Retirement delays

USA Today points out that one study shows the divorce rate is climbing for couples over the age of 50. Dividing a retirement fund intended for one lifestyle puts each spouse in a situation where retirement must often be delayed. People should expect their retirement expenses to increase by at least 30 percent and this means they may have to work longer than they planned.

These delays can be further impacted if a spouse is in ill health, since the retirement will probably need to cover medical expenses. Even if a spouse qualifies for Medicare, the benefits only go so far and this can put an unexpected financial burden on the spouse who is struggling with a health condition.


Whether a couple has been married five years or 25 years, one problem that can arise when dividing retirement plans is tax. Fox Business states that couples should use a qualified domestic relations order. If worded correctly, a QDRO can protect the rights and interests of both spouses from changes in the investment world or during the division of the funds in a retirement account. For example, if a couple decides that each spouse will receive half of the account amount, the order should specify those amounts.

Another way to avoid a tax bill, when dividing an IRA account, is for spouses receiving part of the account, to set up a separate IRA account in their name and to make sure that the transfer is completed after the divorce is finalized. The division of the account should also be included in the terms of the divorce settlement, so that there is documentation if the transfer is questioned.


It is important for couples to remember that a retirement planned to support one lifestyle must now support two separate lives. If couples are still planning to retire at the originally projected age, they may be forced to rethink some of those retirement plans. These adjustments can include the following:

  • Selling the family home and buying something more budget friendly
  • Taking less trips than planned
  • Cutting out luxury items
  • Don’t give adult children money for weddings and special events
  • Lower the amount of inheritance the children will receive

Additionally, couples may have to adjust their daily spending habits. For example, an ex-wife may need to go to the salon less, create budget friendly meals and cut down the entertainment of family and friends.

Legal guidance

Dividing retirement plans can be complicated and confusing. Some spouses may not understand what rights they have to a retirement plan that is in the name of the other spouse. Other spouses may be unsure how much they may need in the long-term to avoid financial difficulties. Spouses contemplating the division of property, including retirement plans, may find it of benefit to speak with an attorney.

Keywords: divorce, retirement, assets, property

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