Older couples separating in Colorado may view their divorce as an incentive to plan for their future. Under Colorado’s equitable distribution laws, nonworking spouses have a right to receive a fair share of their working spouses’ retirement plans. As noted by Forbes, a fair division may include sharing the proceeds of a pension plan, 401(k) fund or stock account.
Because income earned during a marriage classifies as marital property, a spouse may request funds from an employer-sponsored retirement plan. The legal discovery process during a divorce could include reviewing a retirement account’s balance. The court may determine how much qualifies as shared marital property and then divide the account based on fairness.
Applying for an ex-spouse’s Social Security benefits
The Social Security Administration provides ex-spousal retirement benefits. According to SSA.gov, an unmarried ex-spouse may apply for benefits if a marriage lasted for at least 10 years. Both ex-spouses, however, must first turn 62.
A non-working spouse may apply for Social Security benefits two years after finalizing a divorce. To qualify, the nonworking ex-spouse must show personal earnings that reflect less than his or her working spouse’s earnings. The payments could begin with a reduced amount. The SSA may later increase the payment by determining an amount based on work history.
Planning for post-divorce retirement income
As reported by the AARP, the maximum amount ex-spouses may receive in Social Security benefits is no more than 50% of an ex-spouse’s monthly payment. Benefits, however, may increase after reaching full retirement age. With court approval, a spouse may also request funds from a working spouse’s other retirement plans. The amount may be a one-lump sum payment now or in the future.
When ex-spouses learn how much they could receive, divorce settlement negotiations may lead to a comfortable retirement. Financial assets, which include retirement accounts, divide fairly under Colorado’s laws.