Texas residents going through the divorce process will need to think about their finances after the divorce is completed. Being prepared about what is to come will also make it easier to adapt to the significant financial changes that often accompany the end of a marriage.
The first thing to adapt financially to a new normal after divorce is to create a budget, as suddenly income amount will be very different. In fact, according to the 2018 National Retirement Risk Index, most people need to make about 30 percent more in income after divorce to maintain the standard of living they were used to. This is due to the fact that the household income often changes from two incomes to one, marital assets are split, and savings and retirement accounts need to be rebuilt.
Planning for retirement is another aspect that needs to be considered after the divorce, since, in many cases, the settlement includes splitting retirement savings accounts. Adjustments need to be made, including predicting if each person will have to work longer or save more to ensure their retirement plans. Another change that can have financial impact is insurance. For some people, divorce means losing their ex-spouse’s work-provided health insurance. For others, additional insurance, such as higher disability insurance, might be something they seek out. Taxes also need to be considered, as there might be tax-implications related to the divorce settlement and the assets that go to each spouse. Finally, it is important to review and update all financial documents, particularly where there are questions about power-of-attorney and beneficiary forms.
Planning for a financially-healthy life post-divorce begins during the process. During the divorce, it might be wise to consult a family law lawyer to help with the process, from discussing options, filing the correct forms, participating in fair negotiations and having representation in court.