Usually after a divorce, or during it, the main objective is the house. But new advice is saying, forget the house and go for the pension.
Steve Gaito, financial planner says, “As a married couple, you have this vision of riding off into the sunset together when you retire. When the marriage ends, you have to create a new vision of your retirement.”
A survey by ING said that the average married person has $10,000 more in retirement savings than the average divorced person.
Instead of immediately going for the house you should weigh up the pro’s and con’s of doing so. Take a good look at what your joint retirement accounts will mean to you. You might end up getting less of the benefits of those joint plans.
“The spouse who gets the retirement plan assets may be in much better shape for retirement than the one who got the house,” says Regent Atlantic investment adviser Chris Cordaro. Houses are illiquid and have carrying costs that may be difficult to maintain on a single person’s income.
In many marriages, the management of the family investments is left to one person. You might find yourself in an area you know nothing about.
Try putting the money into a target-date fund, which gives you a premixed, diversified portfolio appropriate for your age, at least until you’ve had a chance to consider other investments. The target funds from T. Rowe Price and Vanguard are on the MONEY 70 list.
If you decide to remarry, you can keep the money separate. Just don’t try to keep it a secret.
If you want to keep your assets for your children then think about making a prenuptial agreement. But don’t forget that you are supposed to be working together for your future.
Jacob Gold, financial planner of Scottsdale says, “Individuals can keep things legally separate, but mentally they need to manage everything as if it’s one.”
If you are left alone after the death of your partner you may suddenly have a lot of money. Don’t make the mistake of rushing into anything after receiving life insurance. Put the money in a safe place until you have dealt with the emotional impact of the loss and can think with a clearer head.
Above all don’t let family or brokers rush you into an investment you’ll maybe regret later.