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What to do about retirement savings in a divorce

Divorce can present a number of challenges to retirement plans for people in Arizona. If each person has been saving for retirement and has a roughly equal amount of savings, they might each decide to keep their own retirement account. This can be a simple way of dealing with property division.

However, if one person has been doing all or most of the saving, the other spouse may be entitled to part of those savings. If the retirement account is a pension plan or a 401(k), the couple will need a document called a qualified domestic relations order to divide it. In marriages that lasted 10 years or longer, one spouse may also be eligible to draw Social Security benefits on the ex-spouse's work record. This does not affect the benefits the ex-spouse will receive. To get these benefits, it is necessary that they be greater than the benefits that the person would receive on their own work record. The person drawing the benefits also must be at least 62 and must be unmarried.

One of the challenges presented by retirement after divorce may be that it is more difficult to save with just one income. However, once a person is accustomed to post-divorce expenses, it may be possible to make a new post-retirement budget and to aim for that in savings.

One issue that may arise in Arizona is that it is a community property state, meaning all marital assets are supposed to be split equally. However, this does not necessarily mean that couples must split all assets 50/50. Couples may be able to negotiate an approach to property division that works for them. For example, one person may prefer to keep the home in lieu of other assets as long as that person can afford it.

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