Your Retirement Plan After Divorce

Something that nobody wants to think about or thinks may happen to them, but talking about divorce and specifically, divorce and then your retirement plan. What does that look like if you happen to be going through a divorce or went through a divorce and what could that have a negative impact on your retirement plan. So when we look out there, obviously divorce can be disruptive, all the way to devastating, obviously with your current financial situation and in the future. So when we look at this, right now according to Forbes, 43% of first marriages right now are ending in divorce. 60% of second marriages are ended in divorce and 73% of third marriages end in divorce. And then we found what was interesting that 6% of couples that happen to get divorced, end up remarrying each other. So of that, when you do that, 73% of them stay married for the rest of their lives. So when you look at these different interesting statistics out there, obviously there’s a fair amount of people that are dealing with divorce and that sort of process. So when we look at this divorce and the terms that you may hear of. Another one that has gotten popular, as a term at least over the years is something called grey divorce. And this is something that they reference with specifically, if the couple age 50 or older is going through a divorce. It’s interesting since 1990, the divorce rate for Americans ages 55 or older has doubled and over 65 and older has tripled since 1990. So an interesting piece there of how how that can obviously can affect you. As you can imagine, the later in life that one may get divorced, sometimes the more challenging it is to kind of retool back into those retirement years and have that plan. What are some things you should be looking for if this happens to you or you’re going through this process? One, there’s something called a qualified domestic relations order. Some people call it QuDRO. These get put in place if you’re splitting up qualified plans, 401K plans, such like that. If you’re younger than 59.5, remember there could be early withdrawal penalties and stuff like that. These orders put in place, allow you to move those funds to each other’s portfolios or accounts without some of those penalties and taxes that go into place. Also, understand your Social Security benefits. What are your potential spousal benefits, if you’re going to be drawing off of your now ex-spouse and the rules and regulations that go along with that sort of situation. Health insurance plan, did one of you carry health insurance for the other person and now maybe one of these individual’s has to go out on the marketplace or through their employer. Or maybe you’re 65 and older and Medicare is involved and all that sort of stuff. But making sure you’re looking at that and having the appropriate health insurance is in place. Create an inventory of all your investments and assets. You know, going through and this little account that you forgot about over here and maybe you opened this account or a life insurance account. You know, gather up all of those assets and make sure you understand what they are. What they’re worth. How they function. Whose name they’re in. While you’re doing that, look at beneficiaries. Obviously, most people have as a primary beneficiary, their spouse on if something was to happen to them. You may not want that anymore if you’re going through a divorce, right? So make sure you’re going through and updating those. Because guess what? Beneficiary designations are like written in stone. You know when those happen, if you haven’t made the adjustment and something happens to you, guess what? It’s going to what you have as the beneficiary designation. So make sure that you have those up to date to the appropriate people, whether their children, siblings, friends, whoever you want those things to go to, charities in some cases. Again, make sure they’re up to date especially going through that time. Your retirement plan, obviously, you probably were planning on two Social Securities, two incomes, two groups of assets, all this sort of stuff. And maybe now, you’re in a situation where it’s just one. Where are those sources of income looking at? And then what does the budget look like? Have you had an increase or decrease in expenses? And sometimes even though you’re going from a two person household to a one person household, sometimes you see it increase in costs, housing and all that sort of stuff that happens during that time. So it’s really important too. And obviously, if you’re still working, look at that contribution and all that sort of stuff going into the plan. How are you setting aside savings during these times and all of that? And finally, maybe you have to adjust your lifestyle during that time. Again, when you look out there at your goals and what do you still want to achieve, not only in the workplace, your social life and family and all this sort of stuff? You know consider that lifestyle and that. So if you’re going through this process, you’re not alone. We here at Centennial Wealth Advisory help folks through this time. So if you have questions, comments, concerns when it comes to that and if you just want a second set of eyes on things, let us know. We’ll help you through that process, so you can still plan to retire well.