After a divorce, there are certain moves that you should take to keep your finances as healthy as possible. One item to add to your to-do list is to meet with your financial adviser. A financial adviser can help you figure out what your next money moves should be. At your meeting, make sure to ask the following questions.
1. How Can You Get Your Retirement Savings Back on Track?
During a divorce, the couple has to agree to a dissolution of property. Property includes retirement accounts, such as 401(k)s and individual retirement accounts (IRAs). It is common for one spouse to have to liquidate or make a withdrawal from an account to make sure the assets are evenly distributed.
Run the numbers with your financial adviser to see if your retirement savings are adequate for your projected retirement age. You may need to increase how much you save each year to see that you have enough for retirement. If the divorce dramatically altered your tax situation, your adviser may recommend that you switch the types of retirement accounts that you use so that they better suit your situation.
2. What Steps Should You Take to Meet Your Financial Goals?
After your divorce, put your financial goals in writing. Some possible goals include owning property, becoming debt free, or funding you child's education. Your adviser can help you identity what accounts will work best for your goals and how much you should set aside each year to meet your goal.
For example, if you want to purchase a home in the next three to five years, your adviser may recommend a relatively conservative investment for your down payment savings, such as a bond fund or certificate of deposit. If you have a longer range of time until you plan to use your savings, riskier accounts, such as dividend paying stocks, may be an alternative.
3. Are You Adequately Insured?
It is essential to address your insurance coverage after your divorce so that your children or any other dependent loved ones are taken care of after your death. If your spouse formerly held your insurance coverage as a work-related benefit, you may need to purchase new policies entirely.
Your financial adviser can help you decide what policy you should purchase, in addition to the amount and term. Many question whether whole life or term life insurance is better for their situations; ask your financial adviser inform you of the benefits and disadvantages of each product. When you are ready to buy a new policy, your adviser can help.