If your marriage has ended and you are single again, make sure all your financial arrangements reflect your new status. Here are a few tips to help get your new financial life off to a good start.
Tip #1: Change your beneficiary.
A divorce generally has no automatic effect on beneficiary designations. So, unless you want your ex-spouse to get all your money, make sure you change beneficiary designations on your retirement accounts and life insurance policy and in your will. Make sure when changing the beneficiary, it matches up with your final divorce agreement.
Tip #2: Remove your spouse’s name from all your accounts.
You should close or delete your spouse’s name from all joint bank accounts and credit cards and open or re-register in your own name.
Tip #3: Retain a healthy credit score.
You also should notify all three credit bureaus of your divorce so that future reports will be based only on your credit use. In addition, provide them with your new contact information. After about 6 months, check your reports for any red flags such as your ex-spouse not paying off debt they may have assumed as part of the divorce settlement.
Tip #4: Adjust your investment strategy.
If your investment goals have changed, you may want to shift your assets into less — or more — risky investments. Also, make sure the amount and frequency of your investments are appropriate for your new income and goals. If necessary, re-register investment accounts to your individual name. Most importantly, find a trusted financial advisor to help you navigate and define your new financial path.
Tip #5: Review your retirement plan(s).
Your retirement years may look very different without your spouse in the picture. You may want to start making additional contributions to your 401(k) or IRA to maintain your current lifestyle after retirement. You will need to prepare and implement a budget.
Tip #6: Make sure the QDRO is received.
If your divorce settlement determined how future pension and/or retirement plan benefits will be divided, your ex-spouse’s employer may need to receive a Qualified Domestic Relations Order (QDRO). Make sure the plan administrator gets the QDRO so that you will be able to receive your benefits.
Tip #7: Contact the Social Security Administration.
Even though your marriage ended, if you were married more than 10 years your ex-spouse’s work record may entitle you to receive additional benefits.
Tip #8: Discuss the financial impact with your children.
Take this opportunity to discuss with your children how going from a two-income household to one will impact your finances. It’s a great time to educate them on the difference between needs and wants.
Tip #9: Be pro-active in rebuilding your financial future.
This is an emotionally vulnerable time where making hasty, not well-thought out financial decisions could haunt you for many years. Stick to sound financial principles to avoid getting into debt by making a major purchase such as buying a home right away. Relax, breathe deeply and enjoy the empowerment your new marital status has provided.