Financial moves for the recently divorced

Long version

Divorce is common in our society, but that doesn’t make it any easier to navigate. If you’ve recently finalized a divorce, you’ve likely been coping with uncertainty and tension, but you can still avoid turning an already difficult situation into one that’s even more challenging. How? By making the right financial and investment moves, including the following:

  • Establish your separate financial presence
    Even when you were married, you and your spouse might have maintained some separate accounts. But if you only had joint accounts, now is the time to open your own checking, savings and credit accounts.
  • Update your budget
    It’s likely your budget needs updating. Your household income may be lower or may need to be adjusted for alimony or child support (paid or received). Additionally, your living expenses may have shifted, either higher because you’re no longer splitting expenses such as housing or utilities, or possibly lower because you're no longer supporting your ex’s spending habits. Understanding your new budget will help you feel better informed about your financials options and more in control of your new situation.
  • Prioritize emergency savings
    Divorce is expensive and may have depleted your savings. To get back on your feet, you may want to build an easily accessible source of funds for unexpected drops in income and/or spikes in expenses. If you’re not retired, you may want to keep three to six months’ worth of expenses in emergency savings, although even much smaller amounts can boost your feelings of financial security.
  • Evaluate your retirement plan contributions
    When you were married, you may have been counting on sharing resources and expenses with your spouse in retirement. But now, you may be solely responsible for your retirement, so if you can afford it, you may want to ramp up your retirement plan contributions. You may want to consult a financial professional about setting and achieving new goals.
  • Think about Social Security
    Your divorce could play a role in the benefits you can receive. Once you are eligible for benefits, if you were married at least 10 years and you haven’t remarried, you might be able to receive up to 50% of your ex-spouse’s benefits, offset by your own benefit. If your ex passes away and you haven’t remarried (or you remarry only after age 60), you could receive 100% of their benefit in place of your own. This could be beneficial if your ex-spouse had a higher income or spent longer in the labor force. Since rules can be complicated, contact your local Social Security office to better understand your situation, and keep a record of your ex’s Social Security number.
  • Review your beneficiary designations and legal documents
    You’ll likely need to revise the beneficiary designations on your retirement accounts and life insurance policies. These designations carry a lot of weight and can even supersede the instructions in your will. And, speaking of your will, you’ll likely need to revise it too, along with other legal documents, such as a living trust. Consult with your legal professional to make these revisions.

It can feel like a long road to stability after a divorce – but by following the above suggestions, you may be able to make the trip a little less bumpy – and hopefully shorter – as well.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor. Edward Jones, Member SIPC

Number of words: 542

Short/Radio version

PSA: Financial Moves for the Recently Divorced

TBA: Nov. 23, 2020

Words: 175 (excluding FA’s name, address/phone number)

If you’ve recently finalized a divorce, you’re likely facing some real challenges. But you can at least help yourself by making the right financial moves.

For starters, now is the time open your own checking, savings and credit accounts if you don’t already have them.

Next, think about updating your budget, as your income and expenses have likely changed. Also, ensure you have adequate emergency savings in place.

Then consider your IRA and 401(k). If you weren’t putting as much as you could afford into these accounts before, now may be the time to start.

And, although it may be years away, think about Social Security. If you were married at least 10 years and you remain unmarried, you might be eligible for spousal benefits that could exceed your own.

Finally, contact your legal advisor to change your will, living trust or other important documents.

It can feel like a long road to stability after a divorce – but by taking the appropriate steps, you may be able to make the trip a little less bumpy.

This is (FA’s NAME), your Edward Jones financial advisor at (Branch address or phone #).

Member SIPC

Number of words: 175