Divorce can change many aspects of life, especially when it comes to planning for retirement. It is important to take careful steps to secure financial stability for the future.
With that in mind, there are certain proven tips that can help prepare for retirement after divorce.
Reevaluate financial goals
After a divorce, it becomes essential to reassess financial goals and retirement plans. A single income can affect savings and investment strategies. Start by creating a new budget that reflects current income, expenses and retirement goals. Review retirement accounts, savings and investments to see where adjustments are necessary. Setting realistic and achievable financial goals helps in staying on track for a secure retirement. Consider speaking with a financial advisor to gain clarity on the best ways to meet these new goals.
Maximize retirement contributions
With a shift in financial status, maximizing contributions to retirement accounts becomes even more of a priority. Contribute as much as possible to 401(k) plans, IRAs and other retirement accounts. If age permits, take advantage of catch-up contributions, which allow for higher annual contributions for those over 50. Regularly increasing contributions ensures growth in retirement savings. Employers often match contributions to 401(k) plans, so make sure to contribute enough to receive the full match.
Diversify investments
Diversifying investments can protect against market fluctuations and ensure steady growth. Try to not rely on one type of investment. Spread investments across different asset classes such as stocks, bonds and mutual funds. Consider the risk tolerance and retirement timeline when choosing investments. A diversified portfolio can provide a balance between risk and return, which can provide long-term financial stability. Review and adjust the investment portfolio regularly to align with changing financial goals and market conditions.
Experts explain that going through a divorce after the age of 50 can have a particular impact on one’s retirement plans. Taking meaningful steps to prepare financially can help in achieving peace of mind and independence in retirement.