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Consider your retirement as you divorce

For years you have worked hard at your job. You’ve built a career that you are proud of. The paycheck you bring home is what you depend on to get through each day. That money pays your bills and buys your groceries. Just as you count on it today, you know you will count on your retirement funds in the future.

Now that you are getting a divorce, you fear what will happen to your retirement. You know that property is divided and want to take steps to safeguard your nest egg.

How is property divided?

As part of the dissolution of your marriage, all of your marital assets, debt and property will be divided between you and your spouse. Boston follows equitable distribution practices. This means that your property, including your retirement accounts, will divided fairly between you and your spouse.

How can you protect your retirement?

You should take steps to protect your assets as you head into the divorce process. There are strategies and steps you can take as you divorce.

  • Avoid taking out any early withdrawals: There are penalties to take into account if you are considering an early withdrawal to help offset divorce bills. This behavior can be seen as malicious, there are often income tax penalties and there may be restraints in place that don’t allow this behavior.
  • Consider offering other assets instead: When you divorce, you can negotiate with your soon-to-be ex. If you want to keep your full retirement funds, offer other assets in return.
  • Think about taxes: Different types of retirement accounts have different tax implications that you must consider. Don’t forget which accounts have a post-tax contribution, as those could impact you greatly.
  • Change the beneficiaries on your accounts: This move will safeguard what happens to your money in the event of your passing. Right now, your spouse is probably your beneficiary. Post-divorce, it’s likely you’d want that money to go to another individual.

When you decide to file for divorce will also have an impact on certain plans. Regardless of the circumstances of your divorce, you should weigh all options and ensure that you have a clear understanding of how your actions will impact your financial future.

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