People spend their entire professional lives saving for retirement and many years fantasizing about life after the end of their careers. Most of your retirement plans are probably focused on your spouse, so divorce will obviously change your retirement significantly.
You may no longer want to travel to the same places or pursue the same hobbies that you would have during your marriage. More importantly, the resources available to you during retirement will change as well.
In Virginia, couples that do not have pre-existing marital agreements either need to negotiate property division arrangements themselves or go to court to split their property. What will the end of your marriage mean for your retirement plans?
You will need to split your retirement savings
With the exception of couples who have protected their retirement savings in marital agreements, most couples will have to divide their retirement accounts when they divorce. Virginia’s equitable distribution law means that whatever you added to the account during the marriage will likely be subject to division.
Even if the account is only in your name or your ex’s name, you will still have to share the amount you added to the account during the marriage. That includes employer-matching amounts and other such workplace benefits.
You don’t have to lose savings to penalties
Retirement accounts have rules that govern early withdrawals. There are often penalties assessed if someone pulls money out of a retirement savings account before reaching a certain age, often 65. When you divide a retirement account as part of a divorce using a qualified domestic relations order (QDRO) approved by the courts, you may not need to worry about any penalties or taxes at the time that you split the account.
Your expectations need to change
Unless you have a decade or more to rebuild your savings, you may need to instead rework your budget for retirement. Recently divorced retirees may need to adjust their expectations regarding travel and their standard of living so that they can retire as planned. Others may need to continue working for longer than they expected because they divorce.
Learning more about how you divide your marital property can help you understand the financial implications of a Virginia divorce.