Retirement is the carrot at the end of the stick. We work hard for decades and create a wonderful dream of what we will do during our sunset years. If not handled properly, a divorce can throw these plans off their tracks. Fortunately, you can take proactive steps to avoid any setbacks in your retirement plans. Three specific tips include:
- Check the numbers. If you already know the amount you intend to have set aside prior to retirement, use it to recalculate how much you should set aside each month based on your current income. If you do not know this number, take some time to get an estimate. Make adjustments to your savings plan as needed.
- Create a budget. This tip is basic Financial Planning 101. Although a basic tip given by most financial planners, the tip is a common one for a reason. Knowing exactly how much to put into retirement accounts better ensures that you reach your goal.
- Organize paperwork. Keep organized records. Have a copy of the divorce settlement agreement as well as any additional paperwork about your finances where you can access them easily.
In addition to keeping paperwork organized, it is important to have the right paperwork. Retirement assets in particular can pose some unique challenges when it comes time to divide the asset. A divorce settlement agreement alone is often not enough. In many cases, special paperwork that governs the retirement accounts is required.
As noted in a previous piece, a Qualified Domestic Relations Order (QDRO) may be required. Without this document, you may not get the retirement assets that were agreed upon during the divorce. The risk of missing a need QDRO or other document is mitigated when experienced legal counsel is consulted during the divorce.