If you are over 50 and seeking a Pasadena divorce, it's important to consider how divorce may affect your retirement plans.
Women are more vulnerable during a divorce because they tend to have fewer retirement assets. A recent ING study found that divorced women had $34,000 less than divorced men in their retirement savings.
One common mistake people make when divorcing in their 50s is automatically choosing to keep the marital home. The future value of your home is always going to be open to market fluctuations and home ownership requires ongoing maintenance expenses. In many cases, retirement savings are a better bet for securing your financial future. It's normal to feel an emotional attachment to your marital home, but don't let this feeling keep you from looking out for your long-term needs.
You should also consider the tax implications of withdrawals from retirement accounts. Pre-tax accounts like a 401(k), 403(b), or an Individual Retirement Account (IRA) will require you to pay taxes when the money is withdrawn. After-tax plans like a Roth IRA don't require the payment of taxes when the money is withdrawn. So the Roth IRA will provide a bigger payout even if the dollar amount in each type of account is the same.
After a divorce, a divorcing spouse under the age of fifty nine and a half has a one-time chance to withdraw money from their ex’s 401(k) or 403(b) without having to pay the standard ten percent tax penalty if the assets have been allocated to them through a qualified domestic relations order (QDRO). Although it can be tempting to make a larger withdrawal to give yourself extra money "just in case" unexpected expenses come up, it's best to only take out what you truly need. Every penny you take out now is money you won't have in the future.
How Can We Help?
Please call our office at (626) 683-8113 or email us at info@PasadenaLawOffice.com if you are in need of legal representation during your divorce. Our Pasadena divorce law firm can help you obtain a fair settlement that won't derail your retirement plans.