Women Divorce Retirement: Creating Your New Personal Finance Plan

Key Takeaways

• Create a comprehensive financial plan by starting from scratch: reassess your goals, income sources, cash flow, expenses, and retirement timeline, since divorce likely changed all of these elements significantly.
• Update all beneficiary designations on retirement accounts, life insurance, and investment accounts to match your new estate plan—beneficiary designations override your will, so mismatches can cause your assets to go to unintended recipients.
• Review and update your insurance coverage immediately: health insurance (COBRA expiration dates), life insurance (reassess need and beneficiaries), disability insurance (especially if working years remain), and property/casualty insurance to remove ex-spouse or outdated riders.
• Understand your Social Security options: if married 10+ years, you may qualify for an ex-spouse benefit of up to 50% of their full retirement age amount; consult a planner because your own benefit might be larger, and timing of when you claim (age 62 vs. full retirement age) significantly impacts lifetime benefits.
• Prioritize retirement savings over funding children's college: you can borrow for college but not for retirement; use 529 plans for college savings only after securing your own retirement plan, and remember that being financially secure may allow you to help adult children later.
• Conduct tax planning for your single-filer status: explore opportunities during lower-income years (such as Roth conversions before RMDs begin at age 72) to reduce lifetime tax burden, verify you're filing as head of household if eligible, and review payroll withholding with your employer.