Divorce is more than an emotional transition—it’s a financial one. For individuals nearing retirement or already retired, a marital split can significantly alter long-established financial plans. From dividing retirement accounts to recalibrating income needs, it’s essential to reassess your financial future through a new lens.
According to a 2024 report from the Pew Research Center and U.S. Census data, adults aged 50 and older now account for a growing share of all divorces—a trend often referred to as “gray divorce.” This late-in-life separation creates unique financial complexities, especially around retirement timing, income, and asset division.
The U.S. Department of Labor offers guidance on dividing retirement plans, and the Social Security Administration outlines spousal benefit eligibility rules that can impact post-divorce retirement income.
At Connect Wealth, we work closely with clients navigating these life transitions. Here are key strategies to help ensure your retirement remains on track after divorce.
1. Reassess Your Retirement Timeline and Income Needs
A divorce often changes the financial foundation you once shared. You may now have one income source instead of two, altered living expenses, and different goals.
Start by reevaluating:
- Your target retirement age
- Monthly income requirements
- Housing costs and lifestyle expectations
Tip: Use your post-divorce budget as a baseline. It’s crucial to understand whether your existing retirement savings will support your new financial reality—or if adjustments are needed.
2. Understand the Division of Retirement Assets
Retirement accounts such as 401(k)s, IRAs, and pensions are often among the largest assets divided during divorce. Depending on your state laws and the terms of the divorce, you may need a Qualified Domestic Relations Order (QDRO) to legally divide employer-sponsored plans.
Key considerations:
- A QDRO allows retirement funds to be transferred without triggering early withdrawal penalties.
- Be sure to update beneficiary designations once the divorce is final.
- Understand how Social Security benefits work if your marriage lasted 10+ years—you may be eligible to claim spousal benefits.
Trusted Source: The U.S. Department of Labor provides guidance on QDROs and retirement division during divorce.
3. Adjust Your Investment Strategy for a Single Household
Post-divorce, your risk tolerance and time horizon may shift. You might have less margin for error, especially if retirement is near.
Consider:
- Rebalancing your portfolio to reflect your new financial situation
- Prioritizing income-generating investments for stability
- Ensuring you remain diversified to weather market changes
Tip: Don’t make emotional investment decisions. Divorce is a stressful time—but reacting rashly can jeopardize long-term growth.
4. Review and Rebuild Your Estate Plan
Your estate plan likely needs a complete overhaul after divorce. This includes:
- Updating your will
- Changing healthcare directives and powers of attorney
- Reviewing or creating trusts if needed to protect your assets and heirs
If you have children or dependents, you’ll want to ensure they’re cared for according to your updated wishes.
5. Maximize Tax-Efficient Planning
Divorce can impact your tax situation dramatically—especially when it comes to retirement withdrawals, alimony, and capital gains. A wealth advisor can help you:
- Determine optimal withdrawal strategies
- Minimize tax exposure on divided retirement accounts
- Adjust for filing status changes and income thresholds
For example: The new tax bracket as a single filer could affect how much of your Social Security is taxed or whether you qualify for certain deductions.
6. Build a New Plan—Not Just a New Budget
Post-divorce planning isn’t just about damage control. It’s about rebuilding with intention.
At Connect Wealth, we help clients:
- Redefine financial goals as a newly single individual
- Create updated retirement projections
- Incorporate risk planning, long-term care, and insurance reviews into the new plan
This isn’t just about stability—it’s about opportunity. You have the chance to create a financial plan that supports the next chapter of your life with clarity and confidence.
You Don’t Have to Navigate This Alone
Divorce can feel like starting over—but with the right guidance, it can also be the beginning of a stronger, more personalized financial path.
Connect Wealth specializes in life-stage planning, and we understand the challenges that come with divorce during or near retirement. Our team is here to help you regain your financial footing, build a secure future, and move forward with purpose.
Let’s talk about what’s next.