Those who are getting divorced later on in life may also be thinking about retirement. This is an important area to consider because gray divorce is the only area in which divorce rates are rising. In other words, this specific conundrum is happening more and more to this particular age group. More divorces are happening to those near retirement age, in their 50s and 60s.
The problem often comes when the other spouse was the one who was working and saving for retirement. Perhaps they have a retirement fund or a pension plan that was sponsored through their employer. While the couple was married, both people expected to eventually use this fund in order to retire. But now the spouse who is thinking about asking for a divorce is concerned that they won’t be able to retire because ending their marriage is going to cause them to lose this valuable asset. Is that true?
Using a QDRO to divide retirement benefits
The good news is that retirement benefits can be divided, and this is true even if your spouse hasn’t retired yet, so they don’t technically have those benefits yet. You can set up paperwork stipulating that the eventual payouts have to be split between the two of you. When your spouse does retire, they have to honor this court order and so you will get some of the benefits that you expected.
How do you set it up?
The document used to do this is known as a Qualified Domestic Relations Order, or a QDRO. All cases are unique. It’s important to remember that the percentage of your spouse’s pension plan that you get is not predetermined. It will be set by the court when they issue the QDRO, based on things like your individual earning levels, your age and the percentage of the plan that was earned during your marriage.
But you certainly do not have to lose all of your rights to these benefits and give up your ability to retire. Just make sure you know what legal steps that you will need to take.