By Celeste Lohrenz
Separating from a spouse is not an easy time. Still, important decisions need to be made related to your finances.
Following a separation, you should figure out how to live on your own income. You also should learn about what is going to become of your retirement assets, what Social Security benefits you might be entitled to and whether you are properly insured.
During such time, it’s important that you make informed decisions relating to your finances. Consider the following tips:
- First thing is first: You’re going to need to make sure your financial accounts are registered in your name. That may mean closing previously shared accounts and opening new accounts in your name alone. You may want to consider consulting a tax professional to understand your tax responsibilities to avoid any unanticipated surprises.
- You always need to look at your credit score. The financial burden of divorce may have impacted your credit. Be sure to review your credit history and take measures to repair your credit, if necessary.Chances are you’ll have to figure out how to live on one income. Figure out which expenses you can’t avoid paying every month—like food, utilities, transportation and housing—and then determine how much discretionary spending you can afford on top of that.
- Try to live within your means, as you don’t want to find yourself accumulating more debt.
- It’s probably time to update your estate planning as well. Have your beneficiaries changed following a divorce? Have you designated legal guardians for your children? It is likely time to update your will, as well.
- You should also review your retirement planning. Following a divorce, IRAs are often split via a one-time distribution without early withdrawal penalties. You need to make sure that you’re financially secure over the long haul, so you might want to consider making use of investment services to begin planning for your future.
- You still may be entitled to Social Security benefits. Under the government assistance program, you may be entitled to half of your former spouse’s benefits, assuming those benefits are greater than what you’d be able to get through your own benefits.
Separating from a spouse is never an easy thing for a variety of reasons. But by being aware of various monetary considerations that result from such a separation, you can thus begin making better-informed financial decisions.