What should dependent spouses know about splitting retirement?

On Behalf of | Nov 30, 2020 | Property Division |

If you are a stay-at-home wife or husband, you may have mixed feelings about splitting your ex’s retirement money. Maybe you feel guilty because you did not actively earn that income. However, your supportive role at home, particularly if you raised children or traveled alongside your partner, made it possible for them to excel unencumbered by household duties. 

Your partner may also have his or her own thoughts about whether you deserve a portion of the retirement income. However, state laws and the court decide that: not him or her. 

Economic partnership

CNBC explains that marriage serves as an economic partnership. When a couple separates, each party becomes eligible for a portion of the assets and debts acquired during that partnership. Who acquired what may not matter because of that partnership. 

Federal taxation

When deciding who gets what and when, remember your taxes. Not all assets or debts receive the same tax treatment. Consider this carefully because courts may not factor this in when deciding what counts as an equitable division of assets. 

Trading assets

Women traditionally feel compelled to hold on to sentimental assets, such as luxury vehicles or the family house. This may not make financial sense in the long run. Houses require maintenance and mortgage payments. Luxury vehicles can often become costly to own even when paid off. 

Personal plan

When deciding what works for you, you should consider your personal retirement plan and your earning eligibility. For instance, if you have a good chance of going back into the workforce or working at a family business, you may feel more inclined to take benefits you cannot draw from until retirement. If this is not the case, you may want cash benefits now, instead. 

What works for one couple may not work for the next. Consider the specifics of your situation before making a final decision.