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Top Tip to Reduce Impact of Divorce on Retirement

There are a lot of things that can go wrong during the asset division portion of a divorce. One area that requires particular attention involves retirement assets.

Retirement assets are often a difficult asset to split during divorce. A group of financial professionals recently completed a survey focusing on the more common issues that can arise when attempting to split this asset and provided some information that is insightful for any couple considering divorce.

What were the results of this survey? The survey involved certified public accountants (CPAs) and was conducted by the American Institute of Certified Public Accountants (AICPA).

Three of the main findings from the survey include:

  • Updating estate plans. 51.2 percent of this group of financial planners reported that those prepping for divorce should take time to update their estate plans, with particular attention to the language used to create any trusts.
  • Build retirement accounts. 50.7 percent encourage couples to add more to their retirement accounts, if possible.
  • Decrease spending. When going through a divorce, it can be helpful to decrease overall spending and reevaluate how money will be managed to better ensure future financial success. This was recommended by 42.8 percent of the participants in this survey.

Although these three findings provide some guidance to couples preparing to navigate a divorce, there was one main tip that the advisors strongly encouraged their clients to follow.

How can couples nearing retirement better prepare their finances for divorce? The number one tip from the experts behind this survey when it comes to prepping retirement savings for divorce: become familiar with the accounts.

It may seem like common sense, but the vast majority of couples continue to operate with one spouse, primarily the male, heading the financial portion of the relationship. This one individual is most familiar with the retirement accounts while the other may not even have a full understanding of which accounts are in use.

Take the time to learn. Figure out the current retirement strategy and determine if you want to maintain that plan or make adjustments. An attorney can also help with this process by advocating for your rights and working to better ensure you receive a fair split of the asset.

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