Studies show that one in every four divorces happen to people over 50 years of age. If you’ve been divorced – particularly if you haven’t remarried – your retirement planning picture might look a lot different than that of your married peers.

Whether the breakup happens close to retirement age or earlier on greatly impacts the way your marital assets will be split. Here are a few things to keep in mind while retirement planning both during and after divorce.

Divorcing Close to Retirement
If you find yourself in the unfortunate circumstance of going through a divorce pre-retirement, you should know:

  • Retirement funds added during the marriage are typically considered marital property. Martial property is sometimes divided in half and sometimes according to percentages, differing by state and situation. Know that if your spouse came into the marriage with money already in a retirement vehicle like a 401(k), that money will be treated as separate property.
  • If one spouse is subject to a pension plan, a divorce settlement usually allows the other spouse to be bought-out or to share in some of the benefits.
  • Social security laws generally require a couple to be married for 10 years to receive SS benefits based on an ex-spouse’s record.

How to Plan for Retirement After the Divorce
Once the chips have fallen and the ink is dry on the divorce documents, it’s smart to enlist the help of a qualified retirement professional to help you devise a new strategy for your assets. This is particularly important if you’ve come into a lump sum of money, or if you’re now in possession of a taxable asset (like the family home) that you’ve never been solely financially responsible for in the past.

If you’re due distributions from your spouse’s retirement funds, you may need a Qualified Domestic Relations Order (abbreviated QDRO) from a court to transfer the money, usually to an IRA or IRA annuity in your name. Talk to your financial Adviser about your best option from there, as there are several paths you can take to receive those distributions.

Working with an Adviser During and After Your Divorce
It’s usually advisable to discuss your situation with a licensed financial professional before your divorce in the case of confusing, convoluted financial matters. Divorce can be an emotionally trying time and many divorcees inadvertently muddle their long term financial picture by making financial decisions or agreeing to terms that won’t seem as good years down the road.

Whether your divorce was a year or a decade ago, your retirement picture is likely far different than you thought it would be when you were just starting out. Contact the professionals at Lake Point Advisory Group today to find out how our experienced team can help you make sense of the present and lemonade out of the future.


We are an independent financial services firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. We do not provide tax or legal advice. Always consult with your own qualified Advisers concerning your own situation.

1Source: NPR