The immediate task of negotiating a divorce settlement can consume so much of your time and concentration that you might lose sight of what your life will be like after your divorce is complete. Proper financial planning for the future is not only a good idea, but it can be essential to getting the most out of your divorce settlement.
As Kiplinger explains, once you have made an inventory of all the assets you own, you are in a good position to think about your goals and plans for your life after you divorce. Planning future goals will inform how much money you will try to fight for in your settlement and how to organize your finances going forward. The following three questions may help you to better plan for your post-divorce life.
How will divorce affect my retirement?
The division of your assets is likely to impact your retirement since you will lose money from your retirement accounts to your spouse. If you are young, you probably have not amassed a lot of retirement money, so your retirement timeline might not change much. If you are in middle age or a senior, holding on to more of your retirement money will become crucial. Consider how to divide your retirement assets so you do not incur taxes and penalties for prematurely splitting up your accounts.
What should I provide for my descendants?
You might still provide support for your children at the time of your divorce, so consider their expenses as part of your post-divorce budget. Even if you have adult children who live outside of your home, you may be providing them with financial support for things like student loans. Also, you might want to help support grandchildren if you have any, which will add to your expenses.
Should I account for unexpected expenses?
A divorce is bound to change your lifestyle. You may have to buy a new, smaller home or live on a smaller budget. Whatever your future lifestyle will be, it may benefit you to put aside some money in an emergency fund. Think about what might happen if you lose your job and calculate a fund that can support you for a period of time, perhaps up to a year.