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Lessening blows to retirement savings in divorce asset division

For older Massachusetts couples, the end of their marriage often packs a one-two punch. Not only is their relationship ending, but along with that goes the carefully laid plans and savings for retirement. When it comes to divorce, the financial aspects can be just as upsetting as the emotional ones. Thankfully, however, this doesn’t necessarily have to be the case, as there are some possible strategies that may soften the financial blows.

The cost of divorce varies depending on a variety of factors, and it can be tempting for individuals to dip into their retirement savings to help cover divorce expenses, but advisors strongly recommend against this. Withdrawing early from IRAs and 401(k) accounts results in additional taxes. Even worse, perhaps, doing so carries the risk of a 10 percent penalty if a judge has not yet ordered asset division.

Before individuals can begin to divide these retirement accounts, the first step is to get a total amount of money that includes 401(k)s, pensions, savings accounts, real estate and other financial assets. Next is to value each account in preparation for equitable division, a process that is more complicated than many people initially believe. Because of this, and because the separation of assets must be clearly spelled out in the divorce decree, it’s essential to work out all the details ahead of time, no matter how tedious this may seem. Professional guidance may prove highly beneficial for this step.

When spouses cannot agree on how to equally divide marital assets – as is often the case – an attorney can provide insight to make sure the savings are split fairly. Some divorcing couples even choose to seek the services of a third-party mediation to help with this step. While divorce is common, that doesn’t necessarily make it any less difficult emotionally, but the guidance of a Massachusetts family law attorney can help lessen the financial pain.

Source:, “How to Protect Your Retirement Savings During Divorce“, Sarah Szczypinski, Sept. 2, 2017


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