These days, more and more older spouses across the state of Kansas are deciding to end years-long marriages. Spouses who separate later in life have usually acquired many assets, and this can make for a messy divorce. At this stage in life, older adults have often built up substantial retirement savings. Here are a few ways to safeguard retirement plans and savings amid a high asset divorce.
One helpful piece of advice is to maximize Social Security benefits. This is even more crucial for those who do not have an extensive work history. If an individual was married for at least 10 years, he or she may be eligible for Social Security benefits based on the ex-spouse’s work history. It is recommended to delay drawing Social Security as long as possible to maximize any spousal benefits that can be claimed.
Also, those who do not have an individual retirement account (IRA) should open and establish an account before the divorce is finalized. IRAs are tax-deferred accounts, so any retirement assets a person gets from an ex-spouse can be deposited in an IRA tax-free. However, avoid cashing out any retirement funds, as the government will withhold up to 20% for taxes. There’s also an additional 10% penalty for those who withdraw funds from a retirement account before the age of 59.5.
Contrary to popular belief, a high asset divorce does not require a lengthy and messy court battle. However, there will likely be complex issues to resolve. Those in Kansas who find themselves in this situation may want to consider professional assistance. A seasoned attorney can help to reduce stress and assist in diffusing any contentious situations.