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Protect your ability to retire after an Arizona divorce

Getting divorced often has a serious financial impact on both you and your spouse. There are certain steps you can take to protect your finances and many factors you need to consider to minimize the financial impact of your divorce. One of the areas that is most often significantly changed in a divorce is your retirement fund.

Generally speaking, those divorcing in Arizona can expect to split most of their retirement savings or investments as part of the divorce process. Unless you have a prenuptial agreement that protects these assets or you acquired them prior to marriage, you and your spouse will most likely both and up with part of your retirement fund.

Arizona is a community property state

The laws in Arizona demand a community property approach to splitting assets in a marriage. Any property or debt acquired in the marriage is likely going to be split evenly between both spouses.

This will include assets like retirement funds that are often only held in one spouse's name. While you may have been the only one to directly contribute to your retirement plan, that income acquired during your marriage is shared property with your spouse.

Anything you acquired or purchased during that time is subject to division by the courts. Even amounts contributed by your employer as a matching benefit will be subject to division in your divorce. The good news here, however, is that you won't incur financial penalties if you split a retirement account in accordance with a divorce order.

Adjust your expectations and start planning now for your solo retirement

You probably started planning for retirement prior to your marriage. You likely looked at two sources of income, as well as two Social Security checks. Now, you will have half of what you planned on. This can be a pretty serious concern, especially if you are close to retirement age. Your best option at this point is to start planning now to secure financial stability in your retirement years.

For some people, simply contributing a more substantial portion of their monthly income toward retirement may help recover the amounts lost in the divorce. For others, it may be necessary to plan to work for a few more years to rebuild that retirement nest egg.

Other times, the best approach may be to adjust your expectations about retirement. If you are comfortable with traveling less and living in a smaller space, that can help significantly reduce the expenses of your retirement and the amount of money you need.

Divorce almost always has an impact on your retirement plans. By addressing this as soon as possible, you can limit how significantly your future plans change due to the end of your marriage.

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Reppucci & Roeder Attorneys at Law | 5727 N. 7th Street, Ste. 205, Phoenix, Arizona 85014 Phone: (480) 900-5538 Map & Directions
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