Single For Summer (part 2)
A divorce is much more than just a legal proceeding. A divorce affects every part of the spouses’ lives. When facing a divorce, many people have questions about things that aren’t legal in nature because divorce means changes in relationships with family and friends, church, and finances and more.
One major consideration for people facing a divorce is retirement planning. Of course, dividing retirement assets is part of a typical divorce, but the actual retirement planning that will be needed by both parties after the division of the assets is not a part of the divorce. How do you know if you need a financial planner or if you had a financial planner during the marriage, whether you should find a new financial planner?
- If you are receiving a portion of your spouse’s 401(k) or other retirement plan, and you do not have a financial planner to help advise you on what to do with the portion you will receive, you need a financial advisor.
- If you and your spouse had a planner for years to help manage your investments, but you are receiving a portion of the retirement or investment assets in the divorce, you need a new financial advisor who would be 100% loyal to you without regard for the existing relationship the advisor has with your spouse.
- If you have an existing financial advisor with your spouse, but you wouldn’t hire that person if you were shopping for a financial planner today, then you need a new advisor. That is, if you are not manifestly happy with your existing financial advisor, go get one you like.
- If your marital estate is relatively large, a Certified Divorce Financial Analyst can be very valuable on your team during the divorce to advise on values of different assets. This person will likely be very helpful as a long-term advisor.
- If your fair share of the retirement or investment assets is going to be relatively small, then you need a financial planner to help you make the most of what you have. This becomes truer the older you are because you would have less time to grow a retirement plan before you’d hope to retire.
- If you are getting a divorce and there are no retirement or investment assets for you, then you need a plan on how to save for retirement. Many financial advisors do not charge consultation fees. This is a great time to meet with someone you can grow a long-term financial relationship with.
A recent trend in divorces nationwide is that Baby are getting divorced more frequently per capita than younger generations. These divorcees will have precious little time to make significant changes with their retirement accounts or investments. If you are a Baby Boomer or the generation just below them and facing a divorce, a financial advisor is crucial for you.
If you are a lady who will receive a share of your husband’s 401(k) or other retirement plan, you absolutely need a financial advisor to help you make the most of what you get. A frequent mistake I see ladies make in a divorce is thinking that receiving $250,000 of the spouse’s 401(k) is a lot of money. IT’S NOT. While $250,000 is a very good annual income, it is peanuts as a sum to fund 20+ years of retirement. Any sum smaller than $250,000 requires even more urgent work to maximize it. Amounts above $250,000 can also be inadequate depending on the age of the person.
The reason this problem is especially hard for ladies is that many times the former husband will continue to earn retirement through his work after the divorce and might eventually rebuild the total amount in the account before the divorce, but many ladies don’t have a job that will allow them to build significant retirement to add to the portion they receive in the divorce.
Youngblood Law, PLLC is a Fort Worth, Texas family law firm focusing on helping working people live the life they WANT through divorce and beyond. This essay is intended for educational use only, and is not a replacement for competent legal counsel. If you are facing a family law matter, we recommend obtaining competent legal counsel like Youngblood Law, PLLC. For more information contact us at 817-601-5345, find us on the web at www.youngblood-law.com, or on your mobile device, open your browser and type in lawfw.biz and press Go. Find us on Facebook at www.facebook.com/youngbloodlawPLLC/