Just as splitting each retirement plan is more equitable than trading one account for another, the same goes for trading retirement accounts for other assets.
“Lots of women go for the sentimental assets, particularly the house if that’s where the family gathers,” said Angie O’Leary, a senior vice president at U.S. Bank Wealth Management, but “that’s not necessarily in her best interest.”
Family homes are often expensive to maintain and can draw down funds rather than increase in value, like a retirement account, O’Leary said.
In addition, it’s easy for the dependent spouse to underestimate exactly much a 401(k) could be worth, she said.
“If it’s been maxed out over an entire career, it could be close to $1 million — it’s a big asset,” she said.
“For the spouse that forgoes the retirement account to get the house, that’s not a good financial decision to make in the long run,” said Notchick.
“For people divorcing in their 50s and 60s, you don’t want to start over from square one. In 10 years, that lack of retirement account is going to hurt you.”
