Structuring the best possible divorce settlement involves a large degree of planning. For those Maryland spouses who are nearing retirement, an even greater level of attention must be paid to the division of marital wealth. Understanding where one needs to be financially is critical to reaching those goals, which is why the creation of a long-range post-divorce budget is one of the first tasks that should take place once the decision to divorce has been made.
Creating a post-divorce budget involves making a comprehensive list of all of an individual's monthly expenses. This includes housing and food costs, transportation expenses, and matters such as insurance, savings and even entertainment costs. Be sure to include a strategy for retirement as well, one that outlines when retirement is possible and what one's expenses might be at that time.
Once an individual knows what their financial needs will be after a divorce, it becomes possible to negotiate a property division agreement that meets those goals. One part of that process involves dividing any existing retirement accounts. Spouses should be prepared to roll over any tax-deferred retirement or other investments directly into new retirement accounts, in order to avoid taxation or hefty withdrawal fees. In addition, for spouses who listed their partner as the beneficiary on their retirement savings, this is the time to designate a new beneficiary.
By making wise property division choices, individuals who are nearing retirement age can help offset any financial losses associated with the divorce. While it may be necessary to delay retirement in order to reach one's desired outcome, many in Maryland will find that their retirement plans will not be as drastically affected by divorce as they feared. As with any significant financial move, having a solid plan in place is the key to a successful outcome.
Source: The Washington Post, "5 ways to keep a divorce from being needlessly expensive", Jonnelle Marte, Oct. 31, 2014