If you’re among those in Arizona who will soon be starting with a clean slate in life after years of marriage, you no doubt have many financial issues on your mind. The longer you’ve been married and the older you happen to be (i.e., age 55 or more) may have a significant impact on your financial settlement when you and your spouse part ways. In fact, there are several ways in which a divorce can affect your retirement plans, including, perhaps, causing you to delay it altogether.
Arizona is one of only nine states in the country that operates under community property guidelines in a divorce. This means that the judge overseeing your property division proceedings will split all marital assets equally between you and your ex, 50/50. Losing half of your retirement benefits could change the entire trajectory of your future.
Marriage longevity and age affect Social Security benefits in a divorce
Depending which side of the issue you’re on, a divorce can have a significant impact on Social Security benefits, as well as other retirement finances. If a marriage lasted more than a decade, and a spouse is older than 62, then he or she may have a right to receive half of the other spouse’s Social Security benefits as part of the asset settlement in a divorce.
Spousal support may figure into retirement
If the judge overseeing your divorce orders you to pay spousal support, this can have an impact on your retirement plans. Spousal maintenance often lasts for years. If your plans to retire were based on a monthly amount that included the money you will not be paying to your ex, you might have to readjust your retirement plan.
There are rules in effect regarding Social Security benefits when you divorce. If you were born prior to 1954, you have several options that are not available to you if you were born after that year. It’s important to make sure you understand Arizona divorce laws, as well as those pertaining to retirement and Social Security benefits, before filing a claim or negotiating a divorce settlement.
Divorce may necessitate beneficiary changes
You might have certain retirement plans or policies that list your spouse as a sole beneficiary. If you and your spouse divorce, it is wise to update those plans and policies. Otherwise, they remain in effect. If you die, your ex would still be the sole beneficiary, unless you removed his or her name beforehand.
To protect your interests and to ensure that you receive a fair divorce settlement, it is helpful to carefully review all Arizona laws and guidelines that are relevant to retirement and Social Security benefits, savings accounts, etc., before signing a property division agreement.