Getting a divorce in New York or anywhere else changes many things in one’s life, and these are not pleasant changes. For one, your dream of spending the rest of your life with that one person is gone. Worse still, you may not get to see your children as often as you would like or you may have to see them under supervision.
However, as devastating as this new phase may be, you have to prepare for it. “One of the aspects you need to pay attention to is your retirement plan after divorce; there will be a need for a few changes,” says divorce attorney Mary Colwell of The Colwell Law Group, LLC. Keep reading to discover practical tips on how to reorder your retirement plan after a divorce in New York.
Have a Proper QDRO
If your ex-spouse has a retirement plan that is being sponsored by their employer, you will need to obtain a qualified domestic-related order (QDRO). A qualified domestic-related order caters to spouses who are not the original beneficiaries of the plan. In other words, if you want to get anything from your spouse’s retirement plan and you are not a worker, you need a QDRO.
However, before you go ahead and write a QDRO, ensure you understand the right way it needs to be written. That is, get familiar with the specific rules of the plan administrator because the rules are not the same across the board.
The issue, however, is that it can be quite expensive and time-consuming to get a lawyer to draft it. The best option might be to hire an actuary who specializes in writing QDROs, preferably in New York, for easy access.
Check to See If You Are Entitled to Social Security Benefits In New York
Understanding the rules that govern Social Security spousal benefits is essential to ensure you do not lose your privileges. With that said, a divorce does not necessarily mean lost access to your spousal benefits for social security. Under New York law, provided you were married for ten years and are still unmarried, you are entitled to some benefits.
Furthermore, if you are at your full retirement age when you begin receiving the benefits, you get up to one-half of your ex-spouse’s benefits. To get that amount, you must have been above or at the retirement age, which changes from time to time. Moreover, your spouse must have been receiving the benefits already, or you have to wait two years post-divorce to start receiving payments.
Rearrange and Continue to Re-evaluate Your Retirement Plan
Now that you are single again, it may be time to revisit that retirement plan. That is because the retirement plan for a married couple factors in two people’s ages, goals, and incomes. With the divorce, you have to decide on a plan that meets your needs, which may mean adjusting your portfolio.
You want to rearrange your retirement plan to reflect your retirement date and personal risk tolerance. Simultaneously, you should update your financial account beneficiaries, unless you still want your ex-spouse as a beneficiary.
Adjust Your Lifestyle to Meet Your Post-divorce Needs
One of the difficult aspects of divorce is adjusting one’s lifestyle; people often do not realize how much divorce impacts their lifestyle. Adjusting your post-divorce lifestyle may mean downsizing your house or changing your job to cater to your bills. Apart from being able to pay bills, you also want to be able to save towards your retirement.
You might find yourself experiencing the devastating and overwhelming feeling of losing your marriage as you effect these changes. As such, surrounding yourself with friends and loved ones with a positive mindset can help you overcome this stage. However, you should see these changes as room for improvement, not failure or setback, and then you can make more manageable adjustments.
Conclusion
Becoming single again after years of being married can be devastating to one’s finances and overall well-being. Note that a divorce does not have to, or rather, should not, mean the end of your growth and convenience. Therefore, planning for life after a divorce in New York will help ensure you are prepared for what comes next.