You and your spouse have probably set aside money for years to fund your retirement. Filing for divorce will inevitably impact those retirement savings. Some people have to spend money set aside for retirement to cover the cost of divorce.
Even those who can absorb divorce expenses without tapping into retirement savings will usually have to split retirement accounts and pensions. The community property laws in Texas give each spouse a claim to retirement savings and pension benefits accrued during the marriage.
When you file for divorce close to retirement age, you will want to be proactive about protecting your plan for retirement. Taking the two steps below will help you figure out an estimated budget for your post-divorce retirement.
Learn about your Social Security retirement benefit rights
If you and your spouse both work, you may each have Social Security retirement benefits that you can claim when you get older. However, even in households where both spouses work, it is common for one spouse to learn more or to focus on a career more than the family.
Dependent spouses who left the workforce to raise children or care for the family home can typically make a claim against their ex’s accrued Social Security benefits. Working spouses who earned less than their ex can potentially claim their own Social Security retirement benefits and additional benefits based on what their ex accrued during the marriage. The good news for the higher-earning spouse is that dependent spouse claims after divorce will typically not reduce the benefits they receive.
Know your right to pension and retirement savings
Some people mistakenly think that the name on a retirement account or pension dictates who receives the benefits. Under community property rules, your spouse’s retirement benefits also belong to you and vice versa.
You can ask the courts to allocate part of a retirement account to you or even to order spousal support when your ex begins to receive their pension. Determining how much of a pension or retirement account came during your marriage will give you an idea of what you or your ex may be able to claim in your divorce.
Looking at your retirement savings and benefits will help you create a realistic plan for dividing these complex assets and for retiring independently after your divorce.