Divorce is an unfortunate reality for many couples. It is difficult to keep a relationship going for years, let alone decades. When a marriage ends, it usually places a serious emotional strain on all parties involved.

The emotional strain is only one difficulty of a divorce, though. The other difficulty is the financial strain. When you get divorced, you aren’t only separating your social relationship with your spouse. You are also separating your financial relationship. This can have a significant impact on current and future finances.

What many people may not realize is that a divorce can potentially affect retirement plans. How much it affects your plans depends on several factors.

Mutual Consent Divorces

When you get divorced in Maryland, the best way to protect your assets is to get a mutual consent divorce. When this happens, you and your spouse fill out a marital settlement agreement that resolves all issues related to the divorce, including possession of all retirement income. 

Because you aren’t allowing the court to determine how your assets are divided, this type of divorce is the least likely to impact your retirement plans.

Marital Assets

Unfortunately, many divorces end up with the court making at least a few decisions regarding marital assets. When the court divides marital assets, it uses the standard of equitable distribution. This means it tries to fairly distribute those assets, even if that distribution isn’t even.

Generally, retirement funds are considered marital assets, with a single caveat. Any retirement funds you earned before the marriage started are considered non-marital assets. This means you will likely need to be a financial sleuth to prove what you earned before the marriage and what you earned after it began.

This creates a problem. The way most retirement funds are structured, you can’t freely remove money from them. Thus, if a judge orders a portion of your 401k to be given to your spouse, removing money from it would likely result in a penalty, reducing the value of those assets for both parties.

You can potentially avoid this problem with a Qualified Domestic Relations Order (QDRO). This effectively allows both spouses to be named as beneficiaries of a retirement fund and prevents the problem of an early withdrawal.


During a divorce, one of the main issues that will come up is child custody. Unless you and your spouse have roughly equal custody and roughly equal income, this means that either you or your spouse will probably be paying child support.

If you are paying child support, that will have a significant effect on your finances until your children become independent. That means you may have less money to place in retirement. Depending on your circumstances, you may need to delay when you retire or plan to spend less money during your retirement years.

Living Arrangements

For many people who own a home, their retirement plan involves living in their house until they are too old to do so safely and then selling it to finance their final years. That may not be possible after a divorce.

At best, you have a roughly 50/50 chance of owning your home after a divorce. There is a good chance it will be sold during the divorce proceedings. While you will get some money back from that sale, any new home you buy will likely have less value.

This could easily be one of the biggest changes in your retirement plans and you should immediately make new plans as soon as you realize you won’t own your home after the divorce.

Divorces Can Be Expensive

Even if you and your spouse are on relatively good terms and have an agreeable divorce, your expenses during a divorce will probably be in the range of $10,000. If it is an ugly divorce that requires years of litigation, you could spend close to $100,000.

This is a financial setback, no matter how you look at it. Even with a good salary, you will probably need to work a few extra years to make up for those losses. This means that whenever you were planning to retire, you should probably add a few years to that.

Contact JMB | Blattner Family Law Group Today

If your marriage is failing and you are worried about your retirement plans, a divorce attorney may be able to help you preserve as much of those plans as possible. Contact JMB | Blattner Family Law Group today to schedule an appointment with an experienced divorce attorney.