Rebuilding retirement after a divorce
For many couples, the inevitable destruction of their retirement because of divorce may create reverberating consequences. During a divorce, many courts require couples to split their retirement savings. This may include company-sponsored benefits, 401k plans and investment accounts.
An immediate realignment of financial goals can help people retake control of their situation. Contrary to what many believe, the right strategies can help divorcees rebuild a modest retirement.
Guard the settlement
Perhaps the biggest faux pas’ divorcees can make is to spend their portion of the retirement settlement. According to Reuters, statistics show that on average, divorced households have a lower net worth than married households by a staggering 30%. Bearing this in mind, divorcees would benefit from guarding every penny they receive as part of their settlement and using it to start over.
People should know their options for rolling their settlement into a personal retirement account. They may consider working with a financial advisor to strategize the best way to guard and optimize the funds they have. If individuals still have a company-sponsored retirement account, they may consider increasing their periodic contribution if their finances allow.
It may surprise a lot of people how much money they could save with a few simple lifestyle changes. According to CNBC, people can benefit from cutting back their expenses. Some examples of things people may do to increase the money they save include the following:
- Downsize their home
- Pick up extra shifts at work
- Find a side job
- Temporarily forgo cable or streaming services
- Reduce spending on cosmetic treatments and eating out
Opting for a more conservative lifestyle can help divorcees optimize the value of their money. With a proactive effort to rebuild, people may find success in restoring their retirement after a divorce.