VICKIE LYNN COCHRAN attorney at law
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How an Arkansas divorce can impact your retirement

In recent years, more and more people in their 50s or 60s have ended their marriages. These so-called gray divorces are evidence of shifting cultural attitudes about the purpose and necessity of marriage. They can help people lead fulfilling final chapters to their lives. However, they can also have a profound impact on the ability of people to retire as planned.

Retirement requires careful financial preparations and budgeting, as well as many years of savings. However, your planned retirement probably included you and your spouse maintaining one household while reaping the benefits of two retirements, pensions or Social Security checks every month. Once you divorce, the amount you've saved will have to cover two households. That can prove challenging for everyone involved.

People may tap into savings to pay for divorce

Many people choose to tap into their savings account, investments or even a retirement account to help pay for divorce. Between court fees, attorneys and establishing a separate household, there can be a lot of costs that come with divorce. In order to cover those expenses, divorcing couples often need to use money that would otherwise have gone toward retirement expenses.

Every cent you pull from savings and retirement accounts reduces your ability to securely retire. You may need to consider a secondary source of income after divorcing to rebuild your financial situation. Otherwise, you may end up waiting longer to actually retire, because you still need income.

You need to review your finances carefully to determine what your options are and how much retirement savings you can expect to have when the divorce is over. From there, you can determine if you need to increase your income or lower your standard of living during retirement.

Retirement savings usually end up divided in a divorce

Regardless of which spouse made more money or whose name is on an account or pension, the courts in Arkansas typically divide those accounts. The primary exception to that rule is when there is a prenuptial agreement on record that names pensions or retirement funds as separate property. Otherwise, any amount deposited during your marriage could end up split, regardless of who holds the account or whose paycheck contributed to the account.

Arkansas strives for a fair and equitable division of marital property in a divorce. All accumulated assets and income from during the marriage will probably end up split. If the courts order you to divide up a 401K or a Roth IRA account, the good news is that special division processes related to a court order from a divorce will protect your account from any fees, taxes or financial penalties for early withdrawal.

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