If you’ve just finalized your divorce, it can feel overwhelming to assess your financial situation. The divorce process can be complex, emotional and time-consuming, the result may be a much different financial situation than you were in during your marriage.
Before you set aside legal matters entirely, however, there are a few steps you still need to take to pin down details in your retirement account. These are relatively simple tips, but they can have a profound effect on your financial well-being in the long run.
Follow up on the division of your retirement accounts
Assuming you or your prior spouse had retirement accounts during your marriage, you must ensure the accounts were divided as provided in the divorce decree ordered by the court. A qualified domestic relations order or QDRO may be required to divide retirement accounts.
Change your beneficiary designations on your retirement accounts and insurance policies
Contact your life insurance company or companies and your retirement accounts to remove your prior spouse as the beneficiary, unless you are required to maintain the beneficiary pursuant to the divorce decree. Since these accounts don’t go through probate, your prior spouse could inherit your accounts if left as the legal beneficiary. Choose your children or a charity instead.
Reconsider your retirement savings goals
You should assess your savings and goals anytime you’ve gone through a substantial change in your financial life. After a divorce is an important time to reassess. You may need to save less than you expected. Or, the division of your retirement assets may have caused a setback in your savings. If you are falling behind, you will need to start saving more or otherwise increase the value of your accounts.
Review your investment allocation based on risk tolerance
Especially if your prior spouse was in charge of your investment and retirement accounts, you may discover that you have a higher or lower risk tolerance than is currently reflected in your accounts. It may be time to adjust your investments toward higher yield or lower risk options, depending on your needs.