Some compare the end of a marriage to be as destructive as the Great Recession on retirement accounts. However, some retirement experts say there may be retirement savings during a divorce. In Wyoming and other states, a Qualified Domestic Relations Order may allow a spouse to receive money from a 401(k) account without penalties for early withdrawal. These funds are subject to regular income tax, and experts recommend saving the payout for retirement.
The associate director at the Center for Retirement Research said divorce pushes a person’s retirement risk up by 7 percent. Half of working-age households are at risk of being unable to maintain their pre-retirement standard of living, according to the National Retirement Risk Index. There could be challenges to ensure retirement security, with statistics showing about 40 percent of marriages ending in divorce today.
The benefits for a retirement plan participant after divorce is his or her company plan continues to accrue benefits. Everything accrued in the 401(k), post-divorce belongs to the participant. Once the divorce is final, he or she may consider consulting with a financial expert to assess retirement savings. Some may decide it in their best interest to work a few years longer to compensate for a payout to an ex-spouse.
During a divorce, it is important to be informed about all retirement accounts. Residents of Wyoming whose retirement is at risk because of a divorce may consider consulting with an attorney. A lawyer who has experience dealing with cases involving retirement settlement can help evaluate how accounts should be divided.