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Safeguard your retirement savings after divorce

Divorce can happen to anyone for any reason. Various studies say that the overall rate of divorce is on the decline. Some say this may be due to fewer people getting married, but overall, fewer couples are choosing to legally dissolve their marriages. 

However, the rate of divorce among older people, according to many of these same studies, is rising. Data from the Pew Research Center found that the divorce rate for people age 50 and older doubled in the last 30 years. Many Texas residents may struggle after their marriage ends while they try to adjust to a new set of personal finances. The struggle often comes to a head when considering their retirement savings. Fortunately, if this applies to you, experts say there are ways to minimize the impact of divorce on your retirement.

Change your day-to-day finances

If you haven't been working, you may want to get a job. Consider your skill set, and know that you may have to start somewhere that isn't your dream job. If you've been working, definitely stay at your job if you can, since it's often the best means for getting health care. Even though COBRA is an option, it may not be the most cost-effective one.

Another point to consider when thinking about your immediate need for money is your budget. If you don't typically do your own budget, you'll want to start. Even if you have been the one handling all the family finances, you may need to make adjustments to your spending or income. This is also how you can build a savings account if you don't have one and start your retirement fund. Experts recommend investing in low-risk funds, especially if you don't have a lot of years before you're going to retire.

Take stock of your potential income and assets

If you can, try to wait as long as possible to collect Social Security. That way, you will receive the maximum amount of benefits possible. If your spouse worked and you didn't, as long as you were married for at least 10 years, you qualify for Social Security benefits through him or her.

If you and your spouse shared a home, though it may be tempting to keep it, selling it may be the better financial choice. Many people think they can wait until retirement and sell the home, but not many people actually do that. If you're going to keep it, you'll need to make sure to maintain it, which is more costly on one income.

Start your own retirement account

If you don't already have your own retirement savings, now is the time to start. Creating an account may be vital before finalizing your divorce because, if you receive any retirement assets as part of the divorce agreement, you'll need somewhere to put them. An IRA is likely the best bet as long as you leave the assets in place until about age 60.

The most important thing you can do is consult professionals to help you navigate this transition. A financial planner can look at multiple aspects of your personal finances and recommend how to proceed. An attorney who has extensive experience in helping people through the divorce process can serve as your advocate, making sure that your best interests are kept top of mind.

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