Whether your relationship suddenly took a downward turn or had been deteriorating for years, divorce can be an overwhelmingly emotional experience. While many things get better with age, divorce is unfortunately not one of them.
Pursuing a divorce later in life — also called a gray divorce — can have serious financial implications. The financial aspect of ending a marriage might even be more severe for those closer to or already in retirement.
What if my spouse never contributed to our retirement savings?
Like most people in West Virginia, you probably started a 401k retirement account at one of your first jobs. You may have even started additional savings accounts — like a Roth IRA — over the years and contributed to both. If you were the only breadwinner or if your spouse did not take advantage of retirement savings options at their place of employment, your salary might have provided the only financial input.
However, just because you were the only one working and contributing financially to retirement savings does not mean that these accounts are your personal property. Most people typically save for retirement with the intention of providing for both spouses during retirement, and as such, retirement savings are marital property. If you started your 401k before you married, any money saved beforehand is personal property and not subject to asset division.
How do we divide our retirement?
While it is important to divide retirement funds, it is not as simple as halving the account and going your separate ways. You may have to pay penalties and taxes for early withdrawals if not done properly.
A qualified domestic relations order is essential. You must have a QDRO to avoid the hefty penalties for early withdrawal from retirement accounts. However, like with all marital assets, there may still be tax implications you should consider before taking any action.
Divorce doesn't mean the end of your retirement
Unlike their younger counterparts who have more time to financially recover and prepare for retirement, older couples may be understandably concerned about their futures. Although it is a good idea for everyone to take care when approaching asset division, those who are closer to retirement should remain vigilant when it comes to dividing their savings.
Family law in West Virginia can be complex, which can be overwhelming for most people. To avoid costly financial mistakes, it is usually a good idea to work alongside an experienced lawyer who can provide invaluable guidance through the asset division process.