Married couples often work together to prepare for the best future possible. They buy houses together and work to handle one another’s financial obligations, such as student loans. They may also save for retirement throughout the marriage. One spouse may even spend less time focusing on their career to help raise the children so that the other can focus on their career, where they can potentially earn a pension.
Retirement resources can often be a major cause for concern when couples decide to divorce. The idea of losing savings, pensions and even benefits may make people feel anxious about ending a marriage.
What typically happens with retirement resources when couples divorce?
Pensions and savings may be divisible
In many cases, couples have to find solutions for sharing pensions and retirement savings when they divorce. Unless they have a prenuptial agreement stating otherwise, savings and pension benefits accrued during the marriage are typically part of the marital estate. They are therefore subject to division.
Couples don’t have to actually split the account to take its value into consideration when dividing marital assets and debts. It may be possible for people to offset the value of a pension or a retirement savings account with other assets or even marital debts. To appropriately address retirement accounts and pensions, spouses have to determine how much of their value is marital and then include that figure in their inventory of marital assets and debts.
Benefits may still be available after divorce
In scenarios where one spouse left the workforce to support the family or simply earned far less than the other, they may worry about their eligibility for key retirement benefits. People often rely on Medicare insurance coverage and Social Security retirement benefits to ensure their comfort and their golden years.
Provided that the marriage lasted a sufficient amount of time, dependent or lower-earning spouses can still receive Social Security and Medicare benefits based on the income of the other spouse. Both programs require that the marriage last at least 10 years for a dependent or lower-earning spouse to qualify for benefits.
A spouse who may not receive Social Security benefits otherwise can qualify based on their spouse’s employment. People can also supplement their own benefits by claiming their own Social Security retirement benefits and also supplemental amounts based on a spouse’s work history. They can also obtain Medicare coverage based on their spouse’s employment.
Addressing practical concerns about retirement can help people prepare for challenging property division matters during a divorce. An informed approach can help people better ensure their comfort even years after a divorce takes place.
