When couples in Kansas decide to divorce, they often forget to consider the future of their retirement savings. However, the distribution of retirement funds can be one of the most significant financial consequences of the divorce. One partner’s seemingly large stash for future retirement needs can be cut in half seemingly overnight, and the years to come can require that person to step up contributions to plans and other retirement savings. This can be complicated further by mandatory annual caps on contributions to qualified retirement accounts.
For many, dividing a retirement fund can feel different than the division of other assets, even if all are considered marital property. While a home or bank account may be formally in the name of both partners, retirement accounts are often associated with just one partner’s employment. The psychological blow of the division can be substantial, but the practical effects can be even more so. There are a number of ways in which spouses can choose to handle the process, from dividing a fund strictly in half to developing other types of splits based on their unique situation. In some cases, both partners may simply walk away with their own work-related retirement accounts.
The effects of property division do not go away shortly after the divorce is finalized. One study showed that divorced households continue to have 30 percent less net worth, on average, than those that never experienced a divorce. Divorced people are also 7 percent more likely to have insufficient savings to get through retirement.
Couples who decide to split up may expect a difficult emotional fallout, but the financial effects can be truly long-lasting. A family law attorney can work with a divorcing spouse to fight to protect important assets and achieve a fair distribution of property in the divorce settlement.