Divorced Investors - Redefining the End Goal

Divorce is difficult, and transitioning to a new beginning takes time. Making big decisions - mainly financial - should happen methodically and carefully. While going through the process, focus on getting through it. Once things settle down, you can move forward and reset your financial goals.

Newly divorced people often worry about their finances and whether they can maintain their lifestyle. Adjustments are a certainty, which can be overwhelming if you are not the “financial person” in your marriage. This is especially true for women, who tend to experience more income loss post-divorce than men. A December 2021 study published by the National Institutes of Health stated that women experienced a 45% decline in their standard of living, whereas men dropped by just 21%.

Your post-divorce investment philosophy and goals need to work for you. You may have felt part of a financial team as a married person. Now is the time to shift your mindset and think as an individual. For many, this can be liberating or anxiety-inducing. It should reflect your updated needs, objectives, and comfort levels. So, it is essential to start with a few simple steps.

Regain control of your financial life. Seek a financial professional with the tools to help you reset your objectives, much like you sought out the help of a law professional during your divorce.
Update your risk tolerance. You and your spouse may have been more comfortable taking on risks together as a team. Reassess your risk tolerance based on new circumstances such as income, expenses, and other financial obligations. Your risk tolerance will likely shift, and your investment portfolio should reflect it.
Redefine your retirement and beneficiary designations. You’ll want to update the beneficiaries on your investment accounts, retirement plans, life insurance policies, and other assets. Women tend to struggle more than men in saving for retirement after a divorce, given that their median income is 81% of men’s. “Over a 40-year career, the pay gap between men and women adds up to an average of $430,480, according to the Census Bureau. For minorities and women of color, the number is much higher.” (Phys.org 2016)
Revise your investment philosophy based on your new time horizons and risk-tolerance levels and keep your emotions at bay. Diversification is the key to managing risk; consider taking a new approach to reach your updated goals.
Reassess your timelines as well as your tax implications. Divorce can have an impact on your assets and investments. Consult with a professional money manager who understands any tax implications or benefits that may arise from a divorce settlement or changes in your investment strategy. This can help you optimize your tax situation, avoid future liabilities, and adjust timelines to reflect your new investment goals.

No matter who you are, divorce is hard. Research has shown that the older you are, the harder it is to recoup financial security after a divorce. Divorce rates for people aged 50 and over have risen drastically. Between 1990 and 2010, the divorce rate for people over 50 doubled. A later-life split can shatter retirement plans and upend timelines - with less time to recoup losses, pay off debt, and weather stock market fluctuations.

Age can be a factor, and financial security can be elusive post-divorce. But, no matter your age, you are accountable for your financial well-being. Look for ways to enhance and protect your assets. Assess and rebalance your investments and find a trusted advisor to help you navigate each step of this life-changing event. When stressed, people can make hasty financial decisions with long-lasting repercussions. Finding a trusted partner can keep you from making costly mistakes.

Speak with a trusted Vineyard Global Advisor about balancing your assets and resetting your objectives.

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Divorced Investors - Redefining the End Goal

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