Guest Post by AVIVA PINTO, CDFA™
Part II of this 2 part series. Click here for Part I
After you’ve separated your financial lives, work carefully with your financial advisor to focus on planning your future.
Savings Goals
Determine how your post-divorce financial situation affects your ability to save for goals such as college or retirement and whether you will need to revise your expectations. We recommend creating a plan to maximize your savings.
Investment Strategy
You and your advisor can evaluate your investment allocations to make sure they are appropriate for your risk tolerance and your time horizon. An advisor can help you focus on rebuilding your assets while remaining cognizant of fees.
Retirement Planning
Many receive a Qualified Domestic Relations Order (QDRO) that recognizes a former spouse is entitled to receive a predetermined portion of an individual’s retirement plan, usually 50% of the value of the assets gained from the beginning of the marriage to the time of the divorce. If you receive a QDRO, you will need to make sure pre-tax dollars are placed in pre-tax retirement accounts and will need to decide how to manage it. If you do not keep the money in a pre-tax retirement account, you will be responsible for taxes when the money is distributed.
Establish an overall plan to determine how much you will need to retire, then stick to it to maximize your nest egg. A mix of both pre-tax and post-tax accounts can provide the needed balance for most investors. One other item to consider is whether the financial impact of your divorce will change your strategy for claiming Social Security and pension benefits.
Comprehensive Financial Plan
It is important to understand how each of the areas above work together in your overall plan. Your cash flow determines what you can save for various goals each month, your tax situation determines which kind of retirement savings account is best for you, and your long-term goals impact the type of investment strategy you should use. Consider working with a trusted advisor, who operates in your best interest, to make decisions in these various areas.
As you transition to your life after your divorce, taking steps to strengthen your financial situation can provide a level of comfort that allows you to focus on your emotional health and well-being and that of your children and others close to you.
AVIVA PINTO, CDFA™, Director Highline Wealth Management
Aviva Pinto is in charge of portfolio management and client services at Highline Wealth Management in New York. She has been in the business for over 25 years and works with divorcing clients to help them feel more secure about their financial future.
