Resetting Your Retirement After Divorce

Retirement planning can face derailment after a divorce. Married, two-income couples have the advantage of splitting living expenses and pooling all their investment assets, including retirement accounts. Once the marriage is over, costs for separate households may limit the ability of ex-spouses to keep their retirement on track.

After a divorce, individuals generally walk away with a share of joint retirement assets based on how they negotiate that split. However, returning to singlehood means the end of shared expenses with housing, food, transportation and related expenses now being paid out of one wallet, not two. This can mean considerably less money to direct toward retirement and other savings and investments.

To assure a comfortable retirement, many experts advise individuals to save and invest over time so they can live annually on at least 70 percent of their pre-retirement income. Divorcing couples should retain separate qualified financial experts to assure an equitable split of assets and a continuing plan to build a solid retirement in single life.

Here are a few steps to reset one's retirement goals after divorce.

Gather a personal finance team. It's a good idea to hire a financial professional to offer advice on all relevant financial, investment, tax, estate and retirement details of a divorce negotiation. Afterward, individuals may continue with these advisors or interview new ones. Personal referrals are best, but the following resources may help:

• The Certified Planner Board of Standards
• The Association for Financial Counseling and Planning Education
• The Financial Planning Association
• Your state CPA society

Budget. Spending priorities can change after a divorce. Newly divorced spouses should track all new spending diligently so they can reset their budget for retirement. (http://www.practicalmoneyskills.com/retirementcalc) Qualified financial advisors can help review a divorcing individual's budgeting strategy to make sure as much money goes to savings as possible.

Evaluate all retirement assets. When divorce is finalized, it is a wise idea to take inventory of all retirement assets to determine whether they still fit investment goals. If one's 401(k) or employer plan administrator does not have a calculator to help estimate how accounts will grow under certain investment scenarios, refer to Bankrate.com's various retirement calculators for help.

Review Social Security benefits. Most experts urge individuals to wait as close to age 70 as possible to start drawing their Social Security benefits. Check the Social Security Administration's Delayed Retirement Benefits page (http://www.ssa.gov/retire2/delayret.htm) for a discussion of how and when to start taking payments. Also keep in mind that retirees married 10 years or longer who have stayed single may be entitled to Social Security benefits on their ex-spouse's record if they meet certain requirements.

Be honest about new financial limitations. If a serious retirement shortfall emerges after divorce, it's important to reset financial priorities. That may mean speaking with family members about necessary cutbacks in certain expenses. It is important to have retirement in the best shape possible to avoid stress on family finances later.

Bottom line: The personal and financial disruption caused by divorce can make it easy for newly single individuals to neglect their retirement planning. It is important to seek advice and take all necessary steps to keep one's retirement on track.