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Going through a divorce is challenging enough, and it can be even more stressful when it impacts your financial situation.
The end of a marriage can bring about both an emotional and financial toll, with women particularly at risk of seeing their savings and retirement plans depleted. If you're in this situation, what you need is careful planning and a strategic approach to safeguard your financial future.
In this post we'll explore how to prepare for a financial setback, share tips on negotiating your retirement and joint savings, and share how to find the right financial education and support.
While a divorce may mark the end of one chapter in your life, it's also the first page of the next. It's a time of change, with many new challenges and sometimes intimidating uncertainties. Particularly for women, one such challenge is the potential financial setback. Studies suggest that women who divorce later in life experience a significant 45 percent decline in their standard of living. That's why preparing in advance of divorce is so critical.
Here are a few ways to anticipate and avoid financial pitfalls during and after divorce:
1. Preparing for a Potential Financial Setback
Preparation is key when it comes to managing the financial impact of a divorce. Divorce and Your Financial Future: Navigating the Financial Changes Divorce Brings
Assess your financial landscape:
Understand where you stand. Make a comprehensive list of your incomes, expenses, assets, and liabilities.
Craft a realistic budget:
A budget will serve as your financial compass. Make this budget reflective of your current income and expenses. This spreadsheet budget lists every possible expense to take into consideration and does all the math for you.
Establish your own credit and get an updated credit report:
If you don't already have credit in your name, it's time to establish it. Good credit can be a real asset in building your financial independence. Taking a deep dive into your credit report—a detailed snapshot of your credit history—is not just smart, but it's also essential in managing your financial independence. The digital world has your back on this; you can check your credit report promptly and comfortably online.
The three distinguished credit reporting agencies—Equifax, Experian, and TransUnion—are extending a helping hand by offering free weekly reports. You can claim your report at www.annualcreditreport.com throughout this year.
Do you spot any inaccuracies there? No need to fret! The Federal Trade Commission advises you to reach out to both the credit bureau and the affiliated lending institution.
Stockpile an emergency fund:
This might seem tough, especially after a divorce. However, every dollar you set aside can provide you with great financial relief in the event of any unanticipated costs. (Check out this post about building back your savings after divorce for more idea.)
Navigating Retirement and Joint Savings
A significant portion of your financial security rests in your retirement savings and joint accounts. Here's how you can safeguard these: Divorce and Your Financial Future: Navigating the Financial Changes Divorce Brings
Educate Yourself:
Understand your entitlements when it comes to your share in your spouse's retirement plans, investments, and joint savings. Track down any and all statement pertaining to bank accounts, pensions, 401k's, SEPIra's, etc.
Gather Up Your Financial Information And Reach Out to Professionals:
A Certified Divorce Financial Analyst (CDFA) or a Family Law attorney can help you navigate the legal and financial intricacies.
Revisit Your Retirement Plans:
Your retirement plans might need to be adjusted. Make sure you're setting aside a sufficient amount for your retirement years.
Finding Financial Support with The Divorce Planner
At The Divorce Planner, you're not just getting an organization that aids in financial planning. You're joining an empowering community that supports your journey. We offer:
Educational Resources: Utilize our library of conversations with divorce professionals and blog filled with things you should be taking into consideration as you move forward.
Easy-To-Use Financial Planning Tools: Customized to your situation, these tools help you map out your financial future.
Building Back Your Retirement Fund navigating the financial changes divorce brings
Building back your retirement fund is crucial after a divorce.
Start Saving Immediately: Every little bit helps. Start as early and save as much as you can.
Employer-Sponsored Retirement Plans: If available, make full use of these plans. They're a great, structured way to save for retirement.
Speak to a Financial Advisor: They can provide personalized advice based on your circumstances.
Divorce can seem like a financial wreck, especially when you're just emerging from it. But remember, with careful planning those changes can be temporary. The Divorce Planner is here to guide you, support you, and walk with you every step of the way as you reclaim your financial landscape and rebuild your life.
Remember, you're not just enduring a divorce - you're powering through to a new chapter brimming with potential.