The end of a marriage often brings financial hardship, which can be especially challenging if you are near retirement age. CNBC reports that divorced men have a median household income of $38,000 during retirement, while their married counterparts have $67,404 annually. For divorced women, yearly retirement income is $35,736 on average.
If you desire a secure financial future as a divorced person, preparation for retirement is essential.
Financial planning
Before delving into retirement planning, ensure that you have appropriately divided all joint accounts and assets. Your assets should be in your name once your divorce is final. Updating beneficiaries on your insurance policies and estate plans is important to reflect your new circumstances.
Next, you should examine your spending habits and reflect on your financial plans after divorce. If necessary, you might make adjustments to align your spending with your retirement savings goal. Every extra dollar saved today is a significant contribution toward your eventual retirement.
You should also consider your earning potential. If possible, take on opportunities to boost your income, such as returning to work or seeking higher-paying positions. An increase in your earnings, even late in your career, can substantially impact your retirement savings.
Investments and savings
It is important to continue to save and invest as you approach retirement. You can contribute regularly to a retirement account, such as a 401(k) or an IRA. These tax-advantaged accounts offer an excellent opportunity to grow your savings over time.
You should also review your investment portfolio post-divorce. You can assess the risk levels and make necessary adjustments to ensure you have a balanced portfolio. This approach can help protect your assets from market fluctuations.
While divorce can introduce complexities into your life, it also offers an opportunity to reassess your retirement plans and pursue your financial goals.