A Georgia divorce brings about significant changes in your financial situation, and retirement plans are no exception. Having a solid plan in place helps you achieve financial stability during this challenging time and sets you on the path to a secure retirement.
Understanding your options and taking the following steps helps you secure your financial future, even amid the turmoil of a divorce.
Consider long-term goals
While it might be tempting to seek a larger share of immediate assets, such as the family home, you must also consider long-term financial goals. Opting for a larger share of retirement savings might prove more beneficial in the long run.
Explore equitable distribution
The concept of equitable distribution comes into play in many divorces in Georgia. This doesn’t necessarily mean a 50/50 split, but rather a fair division based on certain factors. Negotiating a fair share of retirement savings allows you to secure a more comfortable retirement.
Avoid early withdrawals
You may find it tempting to dip into your retirement savings to cover immediate expenses, but early withdrawals often come with hefty penalties and tax implications. Tapping into an IRA or other retirement plan before you reach age 59.5 typically requires paying an extra 10% early withdrawal tax. Thus, it may be wiser to explore other options for meeting short-term financial needs.
Update beneficiary information
Many people neglect to consider updating beneficiary information amid the emotional upheaval of a divorce. Updating retirement account beneficiaries to reflect your current wishes helps you avoid having your ex-spouse inherit your assets if you die.
You may find that a divorce is the most significant financial transaction you ever encounter. The more you consider the retirement phase of your life during your split, the better the chances of you having a comfortable financial future.