Dividing retirement accounts in a later-in-life divorce
Divorce can complicate the retirement plans of Illinois spouses who decide to separate later in life. The phenomenon of “gray divorce” continues to rise across the country. While there are multiple factors leading to a higher likelihood of later-in-life divorce, these separations can be accompanied by additional financial concerns.
The division of retirement funds can be an important part of property division for couples of any age. When people divorce at 50 or older, however, those funds are more immediately relevant. Retirement age is fast approaching, and each partner has less time remaining in the workforce. In addition, it often costs more to pay for two separate retirements from the same pool of money than it would to fund one joint retirement. Therefore, divorce negotiations over how to divide existing retirement accounts can be particularly critical. If a couple is older but has only been married a short time, the effects on each person’s retirement are likely to be minimal. In many cases, however, the divorcing couple has been married for decades and their finances are deeply intertwined.
When dividing retirement accounts, it can also be important to consider the tax treatment of each type of asset. For example, Roth IRAs are post-tax assets while 401(k)s and traditional IRAs are pre-tax accounts. Therefore, the same amount of money in each type of account does not have an equal value.
Older spouses who are thinking about divorce may have a number of questions about how to recover financially and emotionally post-marriage. A family law attorney can provide advice and strong representation throughout the process in order to achieve a fair settlement on matters such as property division and spousal support.