Cody Sims: 7 Ways To Save For Retirement If You Divorce Later In Life

Monday, March 21, 2022 - by Cody Sims

Ending a marriage can be emotional and full of challenges at any age, even if both parties agree it’s the right decision. When couples over age 50 divorce, they often face the additional task of supporting two separate retirement plans using the assets intended for their combined nest egg. If you find yourself in this position, the following steps can help you boost your savings so that you have enough money to last what could be decades in retirement:

1. Take advantage of catch-up contribution rules. If you are employed and age 50 or older, current 
tax laws allow you to save additional money in your workplace retirement plan or IRA. Check IRS.gov or contact your financial advisor to learn the annual contribution limits for each account you own. 

2. Work an extra year or two before retiring. Every additional year you spend in the workforce means you have one more year to save for the retirement you want to have. Many Americans are spending 20 to even 40 years in retirement, so the extra money you save can make a big difference on the amount you have to live on. 

3. Delay claiming Social Security. Claiming Social Security benefits after divorce can be tricky. Bottom line: it’s worth exploring your options and choosing the best claiming strategy based on your full financial situation. If your former spouse earned a higher income, you may be eligible to receive benefits based on his or her employment record starting at age 62. In most cases, you may qualify if you were married for at least 10 years and you are still single. If you remarried, check the Social Security website to see if you are eligible (SocialSecurity.gov). If you decide to claim benefits on your ex-spouse’s record, keep the following in mind:
• You may claim benefits even if your former spouse is still working. To do so, you must be 
divorced for at least two years.
• The benefits you receive will not impact the amount your former spouse (and current spouse
if he or she remarried) will receive. 
• If your ex-spouse passed away following your divorce, you may still be eligible for widow’s 
benefits. Check the Social Security website for eligibility requirements. 

4. Save your alimony dollars. Spousal support is more likely to be awarded when long-term marriages end. If you are awarded alimony as part of your divorce, consider using it to boost your retirement fund. Alimony is often granted with conditions, including the possibility that the payments will stop if you remarry, so keep those in mind as you plan for your future.

5. Keep your retirement dollars invested. Amid a complex situation, it may be tempting to use your 
retirement savings to meet immediate financial needs. However, doing so could jeopardize retiring 
when and how you want to. Premature withdrawals from retirement accounts are an expensive short-term solution that triggers tax penalties and fees while reducing future retirement income. 

6. Seek advice. Assemble a team of professionals who can provide guidance on how to best divide assets and plan for your future. If you have friends or family who have gone through a divorce, consider asking for a referral. Enlist an attorney or mediator who can help you navigate the legal system (keeping in mind laws vary by state), advocate for your interests and update your estate plan. Also, consult a financial advisor and tax advisor for advice on crafting your retirement strategy. 

Emotional turmoil brought on by divorce can make it hard to prioritize your finances, but even in the midst of that it’s important to make sound decisions. Even if you’re eager to move forward with your life, take the time to evaluate your retirement plans thoroughly. When you have significant assets or a complex estate to divvy up, there’s too much at stake to rush the process.

* * *

Cody Sims, CRPC, AAMS, AWMA, is a financial advisor and franchise owner with Ameriprise Financial Services, LLC. in Chattanooga, Tn. He specializes in fee-based financial planning and asset management strategies and has been in practice for 27 years. To contact him, ameripriseadvisors.com/james.e.sims, 423-648-2900, and 412 Georgia Ave., Suite 210, Chattanooga, Tn. 37403. 

Investment advisory products and services are made available through Ameriprise Financial Services, LLC, a registered investment adviser.

Investment products are not insured by the FDIC, NCUA or any federal agency, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value.

Ameriprise Financial Services, LLC. Member FINRA and SIPC.
2022 Ameriprise Financial, Inc. All rights reserved.


Governor Lee Announces Key Tennessee Bureau Of Workers’ Compensation Appointments

New And Used Vehicle Sales Rise In June

Jobs4TN.gov System Still Down; Officials Hope To Restore The System Before The July 4th Holiday


Tennessee Governor Bill Lee announced he will appoint Troy Haley to serve as administrator of the Tennessee Bureau of Workers’ Compensation within the Tennessee Department of Labor and Workforce ... (click for more)

New vehicle sales in Hamilton County rose in June to 1,030, and used vehicle sales rose to 4,475, according to figures from the County Clerk's office. That compares to 1,336 new vehicles sold ... (click for more)

Since Sunday, June 25, the Department of Labor and Workforce Development has been working with Geographic Solution, Inc., the vendor that operates Jobs4TN.gov, to navigate a system outage at ... (click for more)



Business

Governor Lee Announces Key Tennessee Bureau Of Workers’ Compensation Appointments

Tennessee Governor Bill Lee announced he will appoint Troy Haley to serve as administrator of the Tennessee Bureau of Workers’ Compensation within the Tennessee Department of Labor and Workforce Development, effective immediately. Governor Lee also named key appointments to the Workers’ Compensation Appeals Board. “Troy is a dedicated public servant, and I thank him for his ... (click for more)

New And Used Vehicle Sales Rise In June

New vehicle sales in Hamilton County rose in June to 1,030, and used vehicle sales rose to 4,475, according to figures from the County Clerk's office. That compares to 1,336 new vehicles sold and 4,234 used vehicles sold in June, 2021. Totals for June included 197 new cars and 833 new trucks sold. They included 1,928 used cars and 2,547 used trucks sold. (click for more)

Breaking News

EPA Awarding Brownfield Grant At Site Of Planned Lookouts Stadium

U.S. Environmental Protection Agency (EPA) Deputy Administrator Janet McCabe on Wednesday is set to present the city of Chattanooga with Brownfield program cleanup and assessment grants at the site of a planned new $79.5 million stadium to be used by the Lookouts. The press conference will be at the U.S. Pipe/Wheland site. The grant is "to help spur economic revitalization ... (click for more)

$79.5 Million Stadium Touted As Catalyst For Major Project At Long-Blighted Wheland/U.S. Pipe Site; Lookouts To Pay $1 Million Annually To Lease "Community" Stadium

More than 100 acres of the long-neglected U.S. Pipe and Wheland Foundry sites "will begin transforming into a world-class live-work-play district that will generate more than $40 million for schools," Hamilton County Mayor Jim Coppinger and Chattanooga Mayor Tim Kelly announced at a press conference at the site on Thursday. Flanked by nationally renowned master developer Jim ... (click for more)

Opinion

New Stadium Does Not Pass The Smell Test - And Response

I can't find any logical reasons that the new Lookout stadium is being placed where it is other than to think it's a combination of favoritism and eliminating an eyesore. All statistics point to an illogical decision coupled with questionable tax breaks/support. Lookouts average attendance in 2018 (all that I could quickly find) was 3,206 per game and ranked 74th among ... (click for more)

School Achievement Tied To Funding?

My career was in the public schools of several states. I never drew the connection to funding for schools and achievement until later. This is what I have found. The states of the deep south are run by Republicans. In all of them, educational achievement is poor. Is there a connection between funding for schools and achievement? The answer to that should be a resounding "yes." ... (click for more)