Most of us are aware that divorce has the potential to ruin one’s personal finances, especially when individuals become accustomed to a double income lifestyle and are suddenly left with a single income. However, the biggest hit happens when spouses must divvy up their assets, including their retirement assets. If you are considering a divorce, or have already filed for one, it is crucial that you take certain steps to safeguard your retirement and future, no matter how far off in the horizon your retirement might be.
Here is what you need to know about protecting your retirement when you are going through a divorce:
Hire a professional to assist you: Divorce can be complicated, so one of the first things you should do is get professional help to ensure you do not end up making any costly mistakes with your finances. An experienced divorce attorney will be able to help you figure out what your spouse is entitled to.
Close all of your joint accounts: This is something you should do early on in the divorce process. Remember to close savings and checking accounts as well as any other credit cards or debt accounts you share. Divorces are not always amicable, so this will protect you against any vindictive actions your spouse might take to harm your financial health.
Do not forget about tax implications on retirement accounts: When splitting retirement assets, you cannot simply withdraw money out of your 401(k) and give it to your ex-spouse. Doing so will lead to tax penalties for early withdrawal. You will need a Qualified Domestic Relations Order (QDRO) to properly divvy it up without being penalized for it.
Get insured: Your former spouse will not have to pay spousal or child support forever. When your children come of age, or if your ex dies, the payments will stop. If you are suffering from medical issues, having disability insurance and health insurance to support you when the payments end can help keep you from having to dig into your retirement savings.
San Diego Divorce Attorneys
If you and your spouse are headed for a divorce, you will need an experienced divorce attorney on your side to protect your interests and to ensure the process goes smoothly, limiting the impact it might have on your future, lifestyle, and finances. At Cage & Miles, our San Diego divorce attorneys are dedicated to representing local families throughout our communities. Our team can represent a wide range of divorce matters, no matter how complex it might be.
Call us today at (858) 943-2060 to schedule a consultation.