The dissolution of a marriage in Alabama can be an emotionally troubling experience, but how it financially affects a person’s future retirement may also be a reason to worry. This is a concern that a rising number of individuals have, as the divorce rate has been increasing during the past 20 years for those over the age of 40. A few tips may help those attempting to navigate retirement planning while getting divorced in Alabama.
Those who have been homemakers for an extended period of time might not qualify for benefits from Social Security if they have not participated in the workplace for 10 years or more. However, they might qualify for 50 percent of their spouses’ benefits if their marriages lasted more than 10 years. Applying will not decrease the benefit amounts that their spouses will receive, and the spouses will not be notified about it.
For a spouse who is eligible to obtain a portion of his or her spouse’s 401(k) or other workplace retirement plan, a qualified domestic relations order — also known as a QDRO — is necessary to divide funds. The recipient spouse can then roll this money into his or her own IRA. Alternatively, he or she may choose to take the distribution while not receiving any penalties. Still, reserving the money for retirement will likely be immensely helpful later in life.
During a divorce proceeding in Alabama, the decisions made regarding property division — including the distribution of retirement funds — will have a long-term impact on one’s finances. The wrong decision may cause a spouse to end up delaying retirement or feeling as though he or she may never be able to retire. Fortunately, an attorney can help to make sure that the settlement pursued is indeed fair and personally beneficial in the long run.
Source: cbsnews.com, “Divorce tips for financial security“, Jillian Harding, Nov. 13, 2017