When life takes unexpected turns, such as a divorce later in life, it’s crucial to reassess your financial plans, especially when it comes to retirement.
You might be thinking, “How much should you save for retirement now that your life circumstances have changed?”
In this article, we’ll explore this important question and general strategies to ensure you are prepared for your future.
- Assessing Your Current Financial Status
Before determining how much to save for retirement, take inventory of your current financial situation. Calculate your assets, including savings, investments, and property. Also, determine your liabilities, such as outstanding debts or obligations. This step will give you a clear picture of your net worth and the resources you have to work with. - Setting Retirement Goals
Retirement isn’t just about having a certain amount of money; it’s about the lifestyle you want to lead. Ask yourself questions like, “Where do I want to live?” or “What activities do I want to enjoy?” Setting specific retirement goals will help you estimate the cost of your desired lifestyle and, consequently, how much you need to save. - Understanding Retirement Accounts
Knowing the ins and outs of retirement accounts is crucial. Two common options for older divorcees are Individual Retirement Accounts (IRAs) and 401(k) plans. Understand the tax implications, contribution limits, and withdrawal rules associated with these accounts. Also, consider consulting a tax professional to optimize your retirement savings strategy. - Budgeting for Your Retirement
Creating a budget tailored to your post-divorce life is essential. Factor in your monthly living expenses, healthcare costs, and any support obligations. Allocate a portion of your income specifically for retirement savings. A well-intentioned budget will help you stay on track. - Investment Strategies
Diversifying your investments is key to growing your retirement savings. Consider a mix of stocks, bonds, and other assets that align with your risk tolerance and financial goals. Regularly review and adjust your investment portfolio to adapt to changing market conditions. - Preparing for the Unexpected
Life is unpredictable, and financial setbacks can happen. Ensure you have an emergency fund set aside to cover unexpected expenses. This fund can help you avoid tapping into your retirement savings prematurely. - The Importance of Professional Advice
Navigating post-divorce retirement planning can be complex, which is why it’s vital to seek professional guidance. Certified Divorce Financial Analyst™ (CDFA™) professionals specialize in helping individuals in your situation. They can provide personalized advice, ensuring that your retirement plan aligns with your divorce settlement and long-term goals.
Conclusion
In conclusion, determining how much to save for retirement is a journey that requires both self-awareness and financial literacy. Remember that seeking professional advice from a Certified Divorce Financial Analyst™ can make a significant difference in securing your financial future.
Work with us
If you have more questions about divorce, our team is here to help you every step of the way. At Purposeful Wealth Advisors, we work closely with divorce attorneys, accountants, and other dedicated professionals to arrive at comprehensive solutions for our clients.
Opinions expressed in the attached article are those of the author and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation
