Divorce can affect every aspect of your life, including your retirement plans. Retirement accounts are often divided between spouses during a divorce, which could disrupt years of planning.
However, there are steps to take before or during the divorce process that may help you protect your retirement.
1. Understand asset division policies
Georgia law considers retirement accounts to be marital property. This means that a portion of the retirement savings earned during the marriage can be subject to division. The court may divide 401(k)s, IRAs, and pensions based on what each spouse contributed during the marriage. Get an accurate valuation of these accounts so you know what to expect during asset division.
2. Gather documentation of all retirement accounts
Before starting the divorce process, gather detailed records of every retirement account. This includes account balances, statements, and any other financial documents. The court may require this information to fairly assess the assets. Knowing the exact value of each account can help when negotiating the division of assets.
3. Consider negotiating in exchange for other assets
Keep in mind that you have the option to negotiate to keep your retirement intact by offering other assets in exchange. For example, you might agree to give up rights to the family home or other valuable property to maintain full control of their retirement accounts. Depending on your unique situation, this option may help protect your future financial stability.
4. Keep track of tax implications
Tax consequences can affect how retirement accounts divide. Early withdrawals from retirement accounts, for instance, can lead to penalties and taxes. It is important to consider these costs when negotiating a settlement, as they can reduce the value of the retirement assets.
Your retirement plans and savings may represent your future financial well-being. That is why it is important to take action to protect your retirement savings. Making preparations before the divorce process even begins can give you the foundation you need to navigate financial complexities at every step of the procedure.