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The impact of divorce on retirement savings

After a Maryland divorce, your retirement picture is undoubtedly going to look different than it did during your marriage. While market conditions might help determine the value of your retirement savings to some degree, so, too, does the status of your marital relationship. As someone who is divorcing later on in life, you may feel especially concerned with having enough money set aside for retirement and may be looking for ways to increase or protect your retirement savings.

Per Investor’s Business Daily, the divorce rate among older adults is on the rise, leading many people to question what they might do to make sure they are well-prepared for retirement. In some cases, a divorce has the capacity to cut your retirement savings in half.

What a Qualified Domestic Relations Order does

While research shows that few people understand or try to obtain Qualified Domestic Relations Orders, it may serve you well in the long run to consider one. A QDRO is a type of order you file in domestic relations court that outlines how you and your ex plan to split your 401(k)s. Maryland has an “equitable distribution” statute, meaning you may need to negotiate to determine exactly how much of the 401(k) assets you receive in the split.

What happens in the absence of a QDRO

Failing to secure a QDRO may leave certain things up to chance. Leaving your share of the 401(k) in your former spouse’s plans means you are essentially at the mercy of your ex when it comes to investment decisions. It may, too, lead to issues if your ex remarries, names a new beneficiary and then dies.

Divorce does impact retirement savings, but you maintain some degree of control over how much it does so.

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