When going through a marital split-up, retirement is likely not at the top of the list of priorities in life. After all, focusing on matters such as deciding who keeps the family home or who keeps the children often takes precedence. However, divorce can have a major impact on one’s retirement plans down the road as well.
Local and state laws determine how a couple’s retirement savings will be divided during divorce. Because New Jersey is an equitable distribution state, a judge will decide the most just way in which to split the couple’s assets. The judge will take into consideration a number of factors, including how long the spouses have been married and how effectively each party will be able to support himself or herself after the divorce.
Other factors that a judge will consider include the parties’ health statuses and ages. Judges might also factor in child support and alimony when determining how to split assets. Unfortunately, a judge’s final determination may not necessarily be in alignment with one’s own wishes.
If both spouses are able to see eye to eye on how to split their assets, including their retirement funds, they may benefit from engaging in informal negotiations, collaborative divorce or mediation; for example — all alternatives to traditional divorce litigation. During these processes, they can simply work toward a mutually beneficial and satisfactory settlement. The benefit of such processes in New Jersey is that both parties can feel a greater sense of control over their divorce proceeding.
Source: madison.com, “Can Divorce Destroy Your Retirement?“, Wendy Connick, Oct. 13, 2017