Getting divorced in Virginia can have a very negative impact on retirement plans. When spouses get divorced, they will have to divide all of their marital assets, including the money that they have saved in their retirement accounts. However, there are several ways that people can recover after their divorces so that they can still retire comfortably.
Part of the challenge of rebuilding retirement savings after divorcing is the limits on the accounts. People may lose a couple of hundred thousand dollars from their retirement account balances in divorces but be limited to maximum annual compensation limits. The most that people under age 50 can contribute to their 401(k) accounts each year is $18,500. If they are older than 50, they can contribute $24,500. People are also limited to making annual contributions of $5,500 to their IRAs or Roth IRAs. If they have pensions, they cannot contribute additional amounts each year.
Divorcees may want to maximize their annual contributions while also placing additional savings in taxable investment accounts. This can help them to rebuild their retirement savings. If they can, they might also want to wait to draw Social Security retirement benefits until they reach age 70. Doing so can maximize the amounts that they receive.
Spouses who have been married for a long time before they file for divorce may have a number of complex issues that they will need to resolve. A high-asset divorce may be particularly complex. However, legal counsel could provide valuable guidance during this process. An attorney may work closely with their client’s certified financial planners to help ensure a successful outcome.