Divorce can create many challenges--especially for women--when planning for retirement. Today we answer a question from Jennifer, 50. She divorced her former husband a few years ago. She asks, “How can I Retire at 65?” We take a closer look at her situation and dig into the details to make sure she is on the right track.
- 0:00 – Introduction
- 0:11 – Disclaimer
- 0:16 – Jennifer’s Situation
- 1:12 – Making her money work harder for her.
- 3:04 – Social Security for Divorced Spouses
- 4:18 – Social Secuiry’s basic rules for Divorced Spouses
- 5:29 – Projecting her income
- 8:26 – What can she do to improve her outcome
- 10:44 – Checking the details
- 12:46 – What does retirement look like?
- 13:57 - What if she remarries?
- 15:52 – Final Thoughts.
- 17:06 - Outro
Watch Now: 50 and Divorced. How Can I Retire at 65?
Jennifer sent us this Question
I’m 50 years old. About 5 years ago, My ex-husband and I divorced after 23 years of marriage. My oldest child will finish college next year, and the youngest is going to be a sophomore, but has plans on grad school. Most of the jobs I’ve had have not been what I would call “high paying.”
- When we divorced, I received about $200,000 from my Husband’s 401k, today it’s worth about $220,000. I don’t know much about investing, so I’ve just had it a fund that wouldn’t lose money.
- We sold the house, and I have about $56,000 leftover from the sales proceeds. I’ve use some of this to help my kids while they are at school.
- I earn about $40,000 per year—I take home about $2,400 per month after all deductions.
- I have about $43,000 in my own retirement plan. I contribute about 6% of my pay and my employer matches that dollar for dollar.
What do I need to do so I can retire when I’m 65?
Looking at How Jenifer Invests Her Money
To this point, Jenifer has been very conservative with her investments. This means she is giving up the opportunity to significantly improve her retirement picture. By better allocating her investments she can pursue longer-term growth to help her reach her needs.
Understanding Her Social Security Benefits
Jennifer was married for 23 years prior to her divorce. She can potentially claim Social Security spousal benefits on her former husband’s earnings record. There are a few rules that still apply.
Back of the Envelope Math
By doing some rough calculations, Jennifer is positioned well for retirement. She still has time to save and allow compounding to work in her favor. How much can she accumulate and how much income will her nest-egg generate.
What if? – Things she can do to improve her outcome
Things don’t always go as planned. The answers aren’t always as simple as “save more.” There are other things Jennifer can do to improve her retirement picture
Checking the details
Most likely, Jennifer doesn’t want her ex-husband to inherit her nest egg. Now is the time to check beneficiary designations and other legal documents.
What does retirement look like?
One of the more helpful things to help someone plan for their retirement is to understand what they want to do when they stop working.
What if she remarries?
If Jennifer remarries, it will add complexity to her situation. Social Security benefits could change. She needs to think about beneficiary designations and some other financial parts of life.
If you would like help planning for your retirement, you can reach out to one of our financial advisors. They can help you chart a course for what lies ahead. Simply complete the form to arrange a 15 minute phone call.
Appearing in this video
|Nikki Lude, CFP® - Nikki is a Certified Financial Planner™ in Woodsfield, Ohio. For nearly 20 years she has been helping people plan for retirement, manage wealth, and better integrate money with their lives.||Neal Watson, CFP®- Neal is a CFP® pro in Marietta, Ohio. He began helping people with their retirement and financial planning needs in 1996.|