Going through a divorce can make anyone focus on the here and now as opposed to the distant future, like retirement. After all, the divorce process can involve so many aspects of a person's life that the decisions being made can seem like all-important tasks to focus on. But, a recent article pointed out a part of the process that may not be of immediate concern, but should be: the effect of a divorce on retirement plans.
Most of our Maryland readers probably know by now that retirements accounts are usually part of the property division process of a divorce. But, as the recent article pointed out, some people are more willing to part with the funds in these accounts in exchange for more immediate, tangible assets - such as the family home. Depending on the valuation of these assets, however, that may not be the most prudent approach in light of changing perspectives on retirement planning.
Many people may also choose to shun retirement accounts during asset division because, let's face it - these accounts can get complicated. But the accounts are part of the marital property, and as such they should be considered just as important as other assets.
Depending on when a divorce occurs, every individual in a post-divorce setting will have to re-approach retirement planning differently. For older people, who may not meet and marry a subsequent spouse, the division of property can be huge. For younger people, there may be more than enough time to replenish or re-start a retirement account. Either way, there will be decisions to make and tax implications to contemplate when the retirement accounts are up for grabs during a divorce.
Source: The Huffington Post, "4 Divorce Mistakes That Can Derail Retirement," Marilyn Timbers, Aug. 27, 2013