Post Divorce Checklist
Ten Steps Toward Financial Freedom After Divorce
Feeling anxious and overwhelmed after a divorce? You’re not alone. For most people, divorce is one of the top stressful life events.
The good news? Divorce doesn't have to threaten your financial freedom. Whether you're newly divorced or contemplating divorce, take the ten steps outlined in this post divorce checklist to feel confident and in control as you head into this next chapter.
- Update your will
Your will should reflect your final wishes. You'll need to name an executor to manage your estate and appoint a guardian for any minor children. Choose a power of attorney to make health care and financial decisions. If your former spouse is listed as your power of attorney, you may need to revoke it in writing.
- Change beneficiaries
Do you want your former spouse to receive your retirement and assets after you pass away? We didn't think so. Changing beneficiaries can be done through a simple form (you can fill it out online). If you have a new living will, ask your estate lawyer who should be listed as primary and contingent beneficiaries on your accounts.
- Get all the facts
Education is key to making solid financial decisions. Hire a new team, including a Philadelphia divorce financial planner and accountant, to help you understand and navigate financial issues surrounding the divorce, including cash flow, tax withholdings and child support (if applicable).
- Set goals
Your situation has changed and so have your financial goals. Where do you see yourself in five or ten years? When do you want to retire? How will you invest your money? Setting goals may seem stressful, but think of it as an opportunity to create the type of life you want.
- Create a budget
If you weren't the financial decision maker when you were married, budgeting may be a new concept for you. Not sure where to start? Make a list of your monthly expenses and income (give it your best guess if you're unsure). Now tally up your total expenses. If your expenses are less than your income, you're in good shape. If your expenses are higher than your income, identify areas where you can cut back. Consider working with a Bucks County financial planner to set a realistic budget and track where your money is going.
- Establish a new financial identity
Consolidate your assets, update your Social Security information, close old accounts and pay remaining bills. Apply for new credit cards in your name, so you can build individual credit (run a free credit report first to make sure there are no issues with your credit history). Remember to fill out a W-4 with your new tax filing status.
- Update insurance coverage
Remove your ex-spouse's name from all insurance plans, including health insurance, life insurance, homeowners and auto. If you need to enroll in a new plan, or if you're using COBRA health insurance through your former spouse's employer, talk with your insurer about which options are right for you (and your budget).
- Protect your retirement
The divorce rate among people ages 50 and older has doubled in the past decade. This means more and more people are divorcing closer to retirement. Talk with a Bucks County retirement financial planner about retirement income planning to ensure you have the funds to support your lifestyle after you retire.
- Organize yourself
Set up a filing system to keep track of important documents, tax information, bank accounts, etc. Change all passwords (including email and social media), update your mailing address and notify your employer of updates to your health insurance or 401k. By having a system in place, you can easily access the information you need to make smart financial decisions.
- Build a nest egg
Don't leave anything to chance. Set up an emergency fund that you can tap into in case of an unexpected illness or job loss. Consider disability coverage to cover expenses in case an illness or injury prevents you from working for an extended period of time.
This list may seem daunting, but don't try to tackle everything at once. Take small steps each day toward your financial goals. Most importantly, go easy on yourself. Hit the pause button and recharge. This will help you move forward with a clear mind and leave the past where it belongs.