Date: April 19, 2021

Divorce and Retirement: 6 Steps to Protect Yourself on Either End

Divorce can be messy. It’s often a logistical minefield rife with emotions, heartbreak and frustration. You may not initially look to your financial advisor for support during this time, but a financial advisor can actually help you come out on the other side with confidence and clarity.

In our experience helping clients navigate this transition in life, at Watts Gwilliam and Company, we have found that those who follow 6 simple steps often experience less stress and anxiety during the divorce process – and come out on the other end more prepared for retirement.

While we hope you don’t have to use this information, if you are experiencing this transition in life, contact us. We’re here to help.


Schedule a no-obligation conversation with the team at Watts Gwilliam and Company to see how we can help.


Step 1: Close Joint Accounts

Joint accounts are typically considered marital property during a divorce, meaning you both have equal ownership, even if one spouse deposited most of the money.

Avoid draining these accounts or taking out any excessive withdrawals during a divorce. (You could face legal repercussions if you do.) Instead, keep things “business as usual” and keep making your regularly scheduled deposits and payments.

As soon as your divorce is finalized (or your attorney gives you the green light), open new accounts in your name, move over any awarded assets, and close out your old joint accounts.

You’ll also want to cancel shared credit cards and transfer any remaining balances into each of your names, as well as potentially refinance the house and cars to get them into one of your names.

Step 2: Don’t Incur New Debt Together

Oftentimes, one of the more complicated parts of divorce is figuring out who is responsible for certain debts. After all, both your names may be on the mortgage, credit cards, personal loans, auto loans and more.

To not make things more confusing, put the brakes on any big purchases you had in the works before you started the divorce process. Now is not the time to incur new debts together.

Your debts will often get divided up based on laws in your state.

  1. In most community property states (including Arizona), debts accrued during the marriage get divided equally between both spouses, regardless of who’s name is on it.
  2. In equitable distribution states, you may only be responsible for debts in your name.

Regardless of how your debts get split up, the bank still expects you to pay all bills in your name. Be mindful of this, as your credit could get damaged if the court says your ex is responsible for paying a debt in your name and doesn’t make the payments.

Step 3: Create a New Budget for Life on Your Own

Your income and expenses will likely look a lot different after divorce than they did when you were married. Even if you anticipate being financially comfortable, it’s important to create a new budget so you know how much money you have to work with each month. (Read our recent blog post: Why a Budget and Emergency Fund are Important for High Net Worth Individuals.)

Here’s how to do it:

  1. Add up all your income sources, including your salary, dividend payments and any potential alimony or child support.
  2. Add up all your recurring monthly expenses, including rent or mortgage payments, utilities, food, gas and debt payments. Don’t forget to include one-off expenses like property taxes, home insurance and school tuition.
  3. Subtract your expenses from your income to see how much wiggle room you’ll have in your budget.
  4. Use any extra money to fund your financial goals and save for your future.

This recent blog post may also help: 10 Ways to Make High, Short-Term Earnings Last a Lifetime.

Step 4: Update Beneficiaries 

If you were like a lot of married couples, you listed your spouse as the primary beneficiary on most of your accounts.

But here’s something you may not know: Even if you update your will after a divorce, your assets could still go to your ex-spouse if he or she is still the beneficiary on an account. In most cases, beneficiaries override wills.

Set aside some time to change all your beneficiaries, so your ex-spouse doesn’t inherit your assets in the event of your death. Some common accounts you may need to update include:

  • Bank accounts
  • Retirement accounts and pension benefits
  • Investment or brokerage accounts
  • Life insurance policies
  • Annuity contracts

Step 5: Get Help from a Financial Advisor

Don’t underestimate the benefits of having a trusted financial advisor in your corner during a divorce. The right financial advisor can help:

  • Uncover critical financial assets you may not have thought of
  • Plan for your new lifestyle post-divorce
  • Give you the financial stability you deserve
  • Save for a happy and fulfilling retirement

You don’t have to navigate a divorce alone. No matter how involved you were in your finances before, a financial advisor can help you come out on the other side with financial confidence.

Step 6: Avoid Making Emotional Financial Decisions 

Emotions are generally at an all-time high during a divorce. Conversations can get heated. It can be mentally draining. Physically draining. And by the end of it, it may even be financially draining.

Despite all of this, it’s critical to remain calm and avoid making any decisions that could harm you and your future financial security.

Emotions and money don’t usually mix well. If nothing more, the Coronavirus pandemic was a harsh reminder that life doesn’t always go as planned. But we can be equipped for life’s curveballs. Read our recent blog post: 7 Financial Lessons We Learned from 2020 – And What it Means for 2021.

Financial planning can be complicated in general; divorce can only make it more difficult. You don’t have to go it alone.

  • How do I set myself up for success financially post-divorce?
  • What happens to my retirement?
  • Am I saving enough on my own?
  • How do I still plan for my kids’ future?

At Watts Gwilliam and Company, our financial advisors in Gilbert, AZ can help you answer your questions. We’re dedicated to helping you pick up the financial pieces after divorce and plan for the retirement you deserve. Check out our financial quick guides: Financial Planning Gilbert AZ, and more specifically, Financial Planning for Professional Athletes. If you’d like to discuss your specific situation and how we can help, schedule a complimentary consultation, and get the conversation started.

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David Watts

Dave is one of the firm’s founders. He helps business owners, professional athletes, and other high-net worth clients develop and implement financial plans and strategies. He also specializes in helping those with single-stock positions to diversify and manage their financial lives. Other areas of specialty are wealth transfer plans for concentrated stockholders and business owners; tax minimization strategies for those with employee stock options; cash flow management; and risk management planning.