Retirement Asset Present Value & Future Growth
Why Retirement Assets Require Careful Analysis
For couples divorcing after 50, retirement accounts are often the largest financial asset. In Georgia, these accounts fall under equitable distribution, which means they must be divided fairly, not necessarily equally. But dividing retirement funds isn’t as simple as looking at today’s balance. A thorough divorce financial analysis considers both the present value and the future growth value of these accounts to provide a clear picture of long-term impact.
At Piedmont Divorce Planning, we help clients understand how retirement assets affect both immediate settlements and long-term financial stability.
Present Value vs. Future Growth Value
Present Value: This represents the current balance or lump-sum worth of a retirement account today. It’s a snapshot of what exists right now.
Future Growth Value: This projects how the account will grow over time with contributions, investment returns, and compounding interest. Future value is especially important for those nearing or already in retirement.
In divorce planning, understanding both values ensures that settlement agreements are fair and sustainable, preventing surprises years down the road.
Retirement Accounts in Georgia Divorce
Different types of accounts carry unique rules and challenges:
401(k)s & 403(b)s: Often divided using a Qualified Domestic Relations Order (QDRO).
IRAs & Roth IRAs: Handled differently from employer plans, with distinct tax considerations.
Pensions: Require actuarial calculations to determine both present and projected future payouts.
Social Security Benefits: May also play a role in income planning after divorce.
A professional financial divorce analysis considers how these accounts interact with cash flow needs, taxes, and overall retirement planning.
Why This Matters More After 50
For individuals 50 and older, there’s less time to recover from poor financial decisions. Choosing between present and future value in a settlement can mean the difference between long-term stability and financial strain. For example:
Taking the house today may seem appealing but could limit future income.
Retaining retirement accounts may provide greater security for later years.
Misunderstanding tax consequences could reduce real value by thousands of dollars.
The Role of Divorce Financial Analysis
As a Certified Divorce Financial Analyst® (CDFA®) and Certified Financial Planner™ (CFP®), Heather Ashworth Failla uses specialized tools and projections to:
Calculate the true present value of retirement accounts.
Model the future growth potential of different asset division scenarios.
Weigh the tax consequences of dividing accounts.
Build a long-term cash flow plan that aligns with post-divorce goals.
Protect Your Retirement Security
Dividing retirement assets requires more than just numbers—it requires strategy. By evaluating both present and future values, you can make informed decisions that protect your financial future.
Schedule a consultation with Heather Ashworth Failla, CFP®, CDFA®, CRPC®, CLTC® today to ensure your retirement assets are valued fairly and your future financial security is protected.
Frequently Asked Questions About Retirement Asset Valuation in Divorce
Q1: Why is it important to look at both present and future value of retirement assets in divorce?
Present value shows what an account is worth today, while future value projects growth over time. Considering both ensures a fair settlement and protects long-term retirement security.
Q2: How are retirement accounts divided in a Georgia divorce?
Retirement assets earned during the marriage are considered marital property under Georgia’s equitable distribution laws. They may be divided through a Qualified Domestic Relations Order (QDRO) or by offsetting with other assets.
Q3: What types of retirement accounts are included in divorce settlements?
Common accounts include 401(k)s, 403(b)s, IRAs, Roth IRAs, and pensions. Each has different tax rules and division requirements, making financial analysis essential.
Q4: How does divorce after 50 affect retirement planning?
Divorcing later in life means fewer years to rebuild savings. Decisions about whether to keep cash now or retirement accounts for future income directly impact retirement security.
Q5: Can future growth projections change the outcome of a divorce settlement?
Yes. A settlement that appears fair based on present value may not be equitable once future growth is considered. Professional financial analysis helps balance today’s needs with tomorrow’s retirement income.