After divorce, finances need a fresh look

Divorce can be one of the most challenging and difficult periods that a person can experience in life. Once an agreement has been reached with the former spouse, and even after a divorce decree has been put into place, there may be many things in limbo. One aspect of your life that you should make sure you have a handle on is your finances.

You may have done some financial planning in your past relationship, but now that you are on your own it is more important than ever. If finances used to be a source of conflict in your marriage, at least now you get to make those decisions on your own. It is important you put together a list of your needs and goals, and then take action.

Here are a few items worth your consideration during this post-divorce time:

Get a trusted professional in your corner. After a divorce, many times friends split between spouses, and this may be true for your professional relationships as well. This is an appropriate time to find a professional who can help you make the right decisions for your new life. Having a trusted adviser to bounce bad news off of can help take the emotion out of the decision-making process.

To find an adviser, start by asking friends or family who helped them through a divorce. Your divorce attorney may also be a good referral source. Most advisers will give a complimentary initial visit to see whether the two of you are a good fit. Don’t be shy to interview a few to figure out who is right for your needs.

Update your beneficiaries. Many times people forget that life insurance and retirement accounts such as Roth IRAs, IRAs, and 401(k) pass outside of your will. You may not be excited to have your ex-spouse inherit your assets after you are gone. The same is true with life insurance; it is easy to update by filling out a current beneficiary change form. This is also an excellent time to update your will and health care directive.

Review your insurance and retirement needs. Now that your future is dependent on one income and not two, your insurance needs should reflect this difference. If you are dependent on your income, then you need to consider disability income. If you no longer have dependents to support, your life insurance needs may have decreased. Also consider long-term care insurance; it may be an important coverage for you to have.

Consider retirement planning. You no longer can rely on your spouse’s financial resources if a mistake is made. Make sure you review your Social Security estimates and your retirement accounts. Are they appropriately invested for your new time horizon and risk tolerance?

Having a clear, realistic vision of your situation now will help you make changes so you can navigate to your financial independence. The good news is, it’s all in your hands. After you have moved on from your divorce, there may come a time when you want to consider getting remarried. By getting your personal finances in order, it will raise the bar of what you expect in a partner.

Sarah C. Rieger is a certified financial planner and member of the local Financial Planning Association chapter. Send questions to

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