Maximizing Your Retirement Savings During And After Your Divorce

A divorce brings a lot of emotions with it, including anxiety, and this is often heightened by having to deal with money matters, too. Divorce will likely impact your finances now and in the future, including your future retirement funds.

As you approach your divorce, you should have the mindset that you are going to act to protect yourself financially now and later. Here is what you can do to begin maximizing your retirement savings during and after your divorce.

Get Some Legal Advice

While it can be tempting to handle your divorce without an attorney to save yourself the legal fees, the truth is that this approach can cost you a lot more in the long run. Mistakes you make in the divorce can cause you to end up with less than you would have received otherwise, and these errors also add to the stress of the experience.

Meet with some attorneys in your area so you can compare rates and judge your comfort level with each one. Ideally, you want an attorney you can communicate with and trust.

Negotiate Over Retirement Assets

Many people neglect to correctly negotiate the distribution of retirement assets in a divorce. While retirement may seem like it is far off and something to worry about in the future, the last thing you want to do is discover you can’t afford to retire when you are ready to.

Find a Better Source of Income

While this is easier said than done, it may be time to earn more if possible so you can save more for retirement. If you are not already working to your fullest ability, now is the time to start. Even getting a part-time job for now, if you were not working at all before, is a way to get yourself going. If you are already working full time, try to find ways to increase your income, such as asking for a raise, working toward a promotion, or getting more training or education.

Set Your Target Number

You need to know what your target savings number is for retirement. To do this, you will need to consider a number of factors, including those outlined below.

• The retirement assets you will have after divorce
• Your current age
• Your ideal retirement age
• Your income today and how much you can save
• How much you have saved
• The standard of living you want in retirement
• Your assets after divorce

Look at Your Retirement Options

Once you know your target retirement savings and your desired retirement age, you can start looking for accounts that can help you achieve that goal. If, for example, your employer offers a 401(k) match, start contributing to it at the maximum amount for that match. If the 401(k) is not an option or you have more to deposit, you can get a Roth or traditional IRA. Both of these accounts offer tax advantages.

Start to Budget

One way to reach any savings goals, including retirement, is to create a real budget and stick to it. To save the most, you need to have a clear budget so you can maximize what you are setting aside. Make a comprehensive budget and look at your current spending so you can identify areas in which you can cut costs.

You may think that retirement is decades down the line, but it can come faster than it seems. Work with an attorney so you can protect your retirement assets during your divorce, and take the steps necessary to secure your financial future.