When Ohioans who have been married for years decide to get divorced, they need to try to protect their future abilities to retire. People should avoid making some common mistakes so that they can protect their retirement.
Because of the costs involved with getting divorced, some people make the mistake of withdrawing money from their retirement accounts in order to pay for it. This can cause them significant problems with their future ability to retire. If they are younger than 55 or 59 1/2, depending on the type of retirement account, their withdrawals may be taxed, and they may also have to pay a 10 percent early withdrawal penalty.
If it is possible, divorcing spouses should discuss how they might both protect their ability to retire. They should also determine what the value of their retirement accounts are. For example, contributions that are made to 401(k) accounts are not taxed when they are made but contributions made to Roth IRA accounts have already been taxed. This means that equal balances in these two type of accounts will be worth different amounts. People should also consider their Social Security benefits and how they might factor into their retirement.
Getting a divorce may be complex and involve many issues. People who want to divorce might benefit by consulting with experienced family law attorneys who can help their clients to understand the different tax consequences that they might face. They may also negotiate agreements that help to protect their clients' financial interests and their future abilities to retire. The attorneys may help their clients to view their divorces from more logical perspectives instead of through the lens of emotional conflict, which might help them to reach agreements without engaging in drawn-out litigation.