Northwestern Mutual

Divorce

Minimize the impact of divorce on your financial plan.

Divorce

Divorce can be disruptive to you and your family. Eliminate some of the stress of reinventing your life by taking control of your financial planning.

Where to begin?

See an example of a financial plan
  • Redefine your short- and long-term goals. Picture your reinvented future. What do you see?
  • Develop a budget based on your goals. Make it a policy to pay yourself first before paying other expenses. Consider automatic payroll deductions to your savings account, retirement account and other investment accounts. 
  • Adjust your financial plan, as needed, to reach your new goals. You may now be responsible for your own health insurance, life insurance, funding your child’s college savings plan, and your own retirement. A financial professional can help you understand your options for meeting all of these competing financial goals.

To help you gain financial footing as a single person, make the time to take the following steps:

  • Protect your income. Your ability to earn an income is your greatest asset. Protect it. If disability income insurance is offered through your employer, take advantage of the opportunity and the group rate that may be offered. However, most group plans cover only a portion of your income. So to fully protect yourself, you may want to consider a supplemental individual policy. An individual policy can also be a great way to protect your income if you're self-employed. If you develop a chronic illness or disabling condition, long-term care services can help you get through your daily routines. Extended long-term care is not covered by Medicare, Medicaid or health insurance plans, which is why any plan to protect your income should include consideration of long-term care. And, to protect the financial future of your loved ones, consider purchasing a life insurance policy to make sure they're taken care of after you're gone. Both term and permanent life insurance provide benefits to your loved ones—to pay bills or take care of other financial obligations in the event of your death. If you already have life insurance, you may need to update the beneficiary. 
  • 5 Steps to Take Control Financial Security White Paper
  • Protect your retirement savings. Divorce can have an impact on your 401(k), pension, IRA and Social Security. A financial professional can help you understand the issues you'll need to consider so you can adjust your retirement income plan as needed. Also be sure to update your beneficiaries.
  • Establish an emergency fund. Include in your monthly budget a contribution toward your emergency fund because no matter how carefully you may plan your finances, there can be unexpected expenses like car repairs or veterinarian bills. Aim for a total of six months of living expenses.  
  • Establish or revisit estate planning documents.1    If you were to become incapacitated or die as the result of an accident or illness, would your children or other loved ones know your intentions? Estate planning helps to ensure your wishes are known and honored when you're no longer able to articulate them. It also gives your family peace of mind; you don’t want to burden them with having to make important decisions when they are already dealing with your death. If you already have an estate plan, you may want to review your beneficiaries. If you do not have an estate plan, consider:
    • Naming a guardian for your child or children.
    • Establishing a will or trust for the transfer of assets according to your wishes.
    • Naming a power of attorney for health care.
    • Naming a power of attorney for your finances.
    • Making clear your end-of-life health care directives.

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