Getting divorced may temporarily suspend your retirement planning efforts while you reconfigure your finances. Despite the uncertainty, maintaining as much of your plan as possible will help you protect your future.
Even though divorce will undoubtedly affect your retirement savings, proactive planning and consistent effort can help you minimize your losses.
Prioritize your savings
Depending on your situation, you may have shared retirement assets tied up in several places. These may include employer-sponsored 401K plans, various investment opportunities and personal IRA accounts. While you await a divorce settlement, you may receive instructions to suspend contributions to these accounts. Additionally, you may find that as you transition to financial independence, you do not have as much savings to contribute to these funds.
Despite the changes to your financial situation, you can create your own savings account. Even as your divorce progresses, you can determine a realistic amount of money you can contribute to your savings each month. Your consistent effort can help you plan for your future even if you do not currently know what that future looks like.
Personalize your plan
Another excellent way to protect your retirement plan is to personalize it as soon as you can. If you have an employee-sponsored retirement plan, the Internal Revenue Service recommends that you update your beneficiaries.
You can create your own retirement account and once you receive your settlement of shared retirement benefits, you can roll them into your personal account. Using these funds prematurely may result in costly penalties and fees. As you continue to rebuild your future, prioritizing your retirement savings can give you the opportunity to still enjoy your later years regardless of your divorce.