Making a Plan for Retirement Following Your Florida Divorce
Divorce can take a toll on your finances, both in the short term and the long term if you do not plan appropriately. Yet if you are currently anticipating a divorce in Florida and you work with an experienced Orlando divorce attorney to plan for life after your divorce is finalized, you can take steps to ensure that you are still ready to retire on time. For older adults, this can be particularly complicated since gray divorces, in which retirement accounts are distributed, can leave one or both parties with limited assets for retirement. Indeed, it may be more difficult to bounce back from the financial setbacks of a divorce if you are older, but age alone does not define your ability to get your retirement plans back on track once you are officially divorced.
An article in U.S. News & World Report provides some tips for making a post-divorce retirement plan, and we want to discuss some of those tips with you.
Have a QDRO in Place to Avoid the Penalty
A Qualified Domestic Relations Order (QDRO) is a legal order that is often required, but is helpful at the very least, to distribute retirement benefits from one spouse’s retirement account to the other spouse in a divorce proceeding. Depending upon the type of retirement account, you may be required by law to use a QDRO. Yet even if a QDRO is not necessary, it can allow you to transfer money to your spouse as the court orders without paying the 10 percent penalty that will otherwise be assessed for any early withdrawals from your retirement account.
Gather Detailed Information About Your Income and Make a Budget
You will need to make a budget based on your current income, and the marital assets and debts you can anticipate will be distributed to you in your divorce. Your attorney can help with this.
Open a Savings Account and Contribute Regularly
Once you have separated from your spouse, you should consider opening a savings account and making regular contributions. Even if you cannot yet move funds into your existing retirement accounts, a savings account through your bank can help you to build your retirement savings immediately.
Determine If You Are Eligible to Receive Social Security Benefits through Your Spouse
If your spouse worked more years than you and/or earned more money than you during that time, you could be eligible to receive Social Security benefits through your spouse when you retire. You must have been married to your spouse for at least 10 years and you cannot be remarried when you seek those benefits.
Realize That Your Lifestyle May Need to Change
For many people who get divorced, whether or not they are nearing the age of retirement, it becomes necessary to make lifestyle changes. If you want to retire at the same age you were initially planning prior to your divorce, you may need to live a bit more frugally so that you can save the amount of money you need in order to retire on time. If you are unable to make the necessary changes to your lifestyle after your divorce, you might need to push back your retirement date.
Seek Advice from an Orlando Divorce Attorney
Do you need advice about planning for your retirement after a divorce in Florida? One of the dedicated Orlando divorce attorneys at our firm can assess your situation and discuss options with you. Contact Anderson & Ferrin today for more information.