No one likes to consider thinking about divorce. When people do end up divorcing, often times long term financial concerns do not receive the attention that they should. This is completely normal, divorce after all is not a pleasant thing for most, and most people have more pressing concerns such as where to live next, how to handle reduced income since divorcees have to rely on themselves now, and if children are involved, how to take care of their needs between two households.
One aspect of long term finances that often gets over looked during this period of time is that of retirement and retirement planning. When you are married saving for retirement is much easier since costs are now being divided in half. Now that you have only one wage to rely on saving for retirement is that much more difficult. Not to mention that the divorce itself can result in losing half of any joint retirement savings that you may have been counting on, depending on the outcome of any divorce settlement.
You now have to face saving up to achieve at least 70 percent of your post retirement income alone. Yet due to having to pay fully for housing, food, travel costs, insurance costs, utilities and the like alone saving this 70% could pose you unique challenges ahead.
If you are in the process of divorce or considering opting to divorce soon you should take into account these long term financial hurdles that you will face. This of course can start with hiring a financial planner, as should your soon to be ex spouse. With good legal representation and a skilled financial planner you can ensure that you walk away from the divorce with your fair share of the martial assets. Your financial planner can also assist you going forward with a road map to achieve your retirement goals.
Your lawyer and financial planner will help you with your QDRO document, also known as a Qualified Domestic Relations Order. The Qualified Domestic Relations Order is the split of your martial assets, and this document will allow your joint retirement accounts to be split and deposited into new personal retirement accounts. If you do not use a qualified financial planner then you could be on the hook for tax liabilities rather easily, as could your ex spouse. You should seek out professional help in the form of finance experts, we reached out to Tom Donahue, a financial and lending expert, who contributes to a number of websites including payday loans online lender, bankrates, americas got cash and nerd money to get some suggestions. This is critical both before and following a divorce, and well before any documents are signed.
After your divorce settlement is finalized and all assets have been divided up among both parties of the divorce comes the hard part. You will need to plan or road map your future retirement planning. This will include how many years left you have before you retire while factoring in your current income and assets. You would also be well advised to consider what life style you will pursue post divorce and what lifestyle you want post retirement, as both of these answers will directly impact your retirement planning. You should review your retirement planing every year due to changes in income, lifestyle and other factors such as remarriage that can directly impact your retirement planning.
One of the most important factors following your divorce will be creating a new budget. It is easy following a divorce to loose track of spending, especially since most people will be setting up new housing, buying new furniture and the like. The stress and emotions running wild can add to the chaos of trying to keep track of spending. The number one issue for those post divorce is over spending, as these people try to keep the lifestyle they had which for most is impossible under one income. Only with a proper budget can you reign in spending and save for retirement. A good financial adviser can be of help here to maximize your budget to ensure that any budget created has as much money as possible going to your savings and retirement accounts.