How a Divorce Can Affect Your Retirement

Divorce can be hard on many levels. One of the things that can be crucial is the financial split of the couple’s assets. These assets include retirement benefits and investments. Figuring out how benefits should be divided, or if they are even able to be divided, can be a minefield if not navigated properly.

It is often that one of the spouses becomes the couple’s treasurer, but it is important that both partners are aware of the couple’s financial situation. This is especially true when it comes to investments. If one spouse was not as attentive to the tax responsibilities, it could affect the other spouse’s share. If the spouse was deceptive about the couple’s investments, this could make issues between the couple even worse. Hiring a forensic accountant can help find discrepancies or deceptive practices by the responsible spouse.

When it comes to retirement benefits, there are only certain things eligible  to be split during a divorce. Those eligible are considered community property, and include things like military pensions, GI Bill benefits, IRAs, employee stock option plans, and 401(k) plans. Benefits that are not considered community property are Social Security benefits, Worker’s compensation, and any military injury compensation. It is often advised that if the spouse’s benefits are sizable that the other spouse should petition to split the benefits. Benefits are usually split by percentage instead of a money value in case the value of some of the benefits fluctuates between the time of evaluation and actual settlement.

There are some other exceptions and considerations  when it comes to benefits. For instance, if a spouse invested money or started a 401(k) before the marriage and continued to pay into them during the marriage, the amount invested before the marriage must be deducted from the total amount before any valuation can be made.

When it comes to Social Security benefits, a couple must have been married at least 10 years for one spouse to have a claim to them. However, the claiming spouse cannot have their own Social Security benefit value exceed half of their spouse’s. If there is a possibility that a spouse will have a claim to the other’s Social Security benefits, they may request a delay in proceedings in order to pass the 10 year threshold. If the length of marriage is close to 10 years, the court may issue a continuance. If the spouse with the Social Security benefits dies after the proceedings are over, the surviving former spouse can collect 100 percent of their Social Security.

When married couples split up, the financial quandaries can be messy. Knowing the law, and getting advice from a financial expert is a good idea for both spouses involved. It is beneficial for both spouses to be well aware of the collective financial situation so surprising issues like back taxes or hidden assets can be avoided. Maintaining the financial futures of both former spouses is key to making sure the separation is a clean one with no resentment or animosity between those involved.

It’s Not Too Late For Retirement Resolutions

The first month of 2018 is behind us but it is not too late to take stock of various aspects of our lives. One of the primary areas that is commonly reviewed each year is personal finance. If you are thinking about retiring within the next few years or longer, you may want to create a resolution or two so that you can better plan for your non-working years. However, some people believe that it is simply too late for any type of plan to be effective or beneficial. While it is better to start preparing for non-working years early in your adult years, starting now is better than not making any preparations. These are some of the areas that you can resolve to address in the near future.

Set Retirement Goals

Everyone has some dream about what their life may be like after they stop working in a full-time position. For some, the goal is to continue working on a part-time basis. Others want to travel, and some may simply want to be closer to family. A primary resolution should be to define your goals. Without specific goals, it is unlikely to properly plan for the future. After all, maintaining your lifestyle if you travel frequently may be much more expensive than if you stay close to home.

Eliminate Debt

Another resolution should involve eliminating debt. Debt cannot usually be paid off quickly, so resolve to create a feasible debt reduction plan. When you pay debts off now, you can reduce the amount of income that is needed after you retire. For example, if you pay off your mortgage, car loans and credit card balances, you may be able to live on several thousand dollars less each month. By reducing the income that is required to live comfortably, you can feasibly retire with less money saved up.  Of course, using those funds now may prohibit you from maximizing your financial preparedness for retirement.  We can help guide you through these planning decisions.

Prepare a Budget for Retirement

In addition to making a plan to eliminate debt from your life over the course of the next few months or years, you also need to prepare a budget for your non-working years. This budget will include estimated income from all sources after you quit working. It also will include reasonable estimates for expenses. Your planning should focus on cost-of-living adjustments related to inflation. If you plan to relocate to a new town after you retire, your budget should be realistic for that specific area.

Update Insurance Coverage

Many people who are preparing for the future fail to take into account changing insurance needs after leaving the workforce. As you get closer to retiring, determine if you will continue to need life insurance. Analyze your need for different types of medical insurance and long-term care insurance. Each retiree is in a different position, so there is no catch-all rule regarding how much or what types of insurance you need to have. Remember to update your budget with the premiums for these various insurance products. It is also wise to take into account deductibles that are associated with each policy when determining how much money you will need.

Some people are so discouraged by their late start at planning for this stage of life that they simply throw in the towel. However, you can see that your initial efforts in each of these areas can help you to get on the right path. Even though you think that you may be far behind others who are your age, you may be in a better position than you appear to be at first glance. When you make these important resolutions and start acting on them quickly, you can move forward with confident footing as you approach your non-working years.  Call us at the number below if you need to review your current retirement plan.

Bitcoin and Your Retirement Portfolio

Did you hear about the people that are mortgaging their home to invest in Bitcoin?  It seems that as more and more people become interested in Bitcoin, that more people are thinking about adding it to their portfolio. With the recent major price increase of this cryptocurrency, there seem to be two opinions; one side is saying that Bitcoin is just a fad and that it serves no real investment purpose, while the other side feels the gains are worth the risks. With so many people and opinions out there telling you what you should do, you need to know something before you start to trade Bitcoin or you want to put it in your investment portfolio.

The first risk factor you need to know about Bitcoin or another cryptocurrency, is that it is not regulated at all. Exchanges are regulated, but not the actual asset. That’s right, there is no government agency making sure that the asset is safe or regulated, it is more of a community regulation. This is an obvious risk for investors close to or in retirement, who are more concerned with investment security and safety. Another risk with Bitcoin, it is a volatile investment with the price of the cryptocurrency changing by the minute at times.  The price can literally go up thousands of dollars in a single day, but can also go down a thousand dollars in a single day.  This risk should really be taken into consideration as anyone investing close to or in retirement are likely not in a position to make up for sharp losses if the crypto price falls dramatically and does not go back up. Another thing to know is that Bitcoin is the biggest cryptocurrency but that does not mean that there are not other cryptocurrencies that are high risk as well, such as Ripple, Etherium and more.

Bitcoin and other cryptocurrency have another risk factor, security.  Yes, there have been hacks in the Bitcoin community recently.  One of the largest hacks came in December of 2017 worth 70 million dollars!   This currency is an online or digital currency so security is important and the industry is still navigating their way through these situations.

Adding crypto in your retirement portfolio can be risky, especially at a time in your life when most experts agree that you should reduce your risk to protect your accumulated assets.  Whether it be the stock market or the volatility of Bitcoin, risk is not your friend in retirement.   Make sure that you understand each risk in your retirement plan, have a diverse portfolio and understand that you should have a clear goal and strategy. Rather you are a day trader trying to make fast profits or you are a person trying to save wealth for retirement, you need to be sure that you add some cryptocurrency in your portfolio and that you are aware of the big price movements.

In speculative investments like this, it is wise never to invest more than what you can afford to lose.  Retirement is not the time to put it all on red at the roulette table!

Are You Afraid To Retire?

When a person thinks of retirement, they can have a thousand things running through their mind. They are sometimes met with a mix of emotions about the situation that they are going to be in. On one hand, retiring means that you get to sit back, relax, and enjoy the fruit of your labor. This is what you have been working all those years for; for the time you can live how you want to, and do the things that you have always loved doing. For some people, retiring is a beautiful thing, but retiring for others can be scary.

There are fears that can cross their minds, making them wonder if retiring is a good idea after all.

A fear that people can have is whether the money that they have saved will be enough to last them the rest of their lives.  What if you live until 100?

You have worked throughout your life, and retirement is now your time to enjoy all that you have worked so hard for. If you were in a stable well paying job, you probably were used to living a comfortable life. Will you be able to splurge as much as you used to?  This is a difficult question for some to answer.  So what can you do to take care of this fear?

Find A Financial Planner

Budgeting is the best way to ensure that you have enough money to support yourself through this period. Approaching a financial planner is one way to take care of this and to ensure that your questions are answered and you are supported by someone knowledgeable in finances and retirement.  A financial planner can help you budget according to your previous income and savings, and can even help you understand how much you would need to keep aside for a rainy day and to take care of any medical expenses that might come your way.

If you are thinking of retiring, and haven’t already ended your work phase already, visiting a financial planner before is always a good option. They will be able to tell you if you can retire now or if you have to wait for a few years to be better situated.   We specialize in planning for retirement and are here to answer these questions and more.

Planning For Medical Expenses

Having medical expenses during your retirement is something that can cause some people to hold onto their jobs longer. Often, jobs come with medical care incentives and insurance, which can be a great boon in the case of a medical emergency. However, most companies ask you to forgo these health benefits once you retire, which can make retiring an incredibly scary experience. Planning and budgeting for this can be hard, which is why you should get a health insurance that gives you excellent coverage and which can keep you well situated in these instances.

Keep Yourself Busy

The fear of being by yourself and not having anything to do is something that some people retiring face. You might have been accustomed to getting up early in the morning and heading to work. You might be used to spending your entire day engaged in your job, and then coming home and spending time either with yourself or your friends and family. Retiring means that you have a lot more time on your hands, which can cause some people to get frustrated, bored or lonely. It can be important to find something that you like doing and keep yourself engaged in that. You can take up a small part-time job that lets you work from home, or even take up a hobby that you have always wanted to learn and cultivate that skill. Who knows what new passions you will discover.

There can be a lot to think about when planning for retirement.  We are here to answer your questions and help ease your concerns about this new chapter in your life.