Divorce can disrupt your plans for the future and deplete your retirement savings in a manner you never anticipated. Preparing for your future suddenly feels uncertain and you may grapple with where to start.
Despite the impact of a split on your retirement savings, the right strategies can restore your savings before it is too late.
Know what you have available
Retirement savings can come in many forms including the following:
- IRA
- Pension
- 401K
- Investments
- Real estate holdings
As you prepare to divorce your spouse, make sure you know where your retirement savings are and how to access them. Keep inventory of these assets to verify the accuracy of your settlement once you receive it.
Understand your settlement
A common strategy for splitting retirement savings will require you and your spouse to split everything 50/50. However, there are other, more customized ways of separating retirement assets too. According to Reuters, one study revealed that people in divorced households have nearly 30% less net worth than households that have not experienced a divorce. Understanding your settlement and what retirement savings remain can help you pinpoint right away where you need to rebuild.
Focus on saving and rebuilding
Rebuilding your retirement savings will take time, but it is definitely a worthwhile and achievable goal. Post-divorce, experts recommend adopting a conservative lifestyle to support your quest to restore financial order. Refigure your budget and determine where you can cut spending and save money.
As soon as you can, look for options to roll your settlement into a personal retirement account. As you rebound from your split, you can branch out and take advantage of other forms of saving that will allow you to build compound interest on your contributions. A proactive approach to rebuilding your finances can help you overcome a split.