Divorce can be a tumultuous time, filled with emotional and financial challenges. One of the most significant concerns for many women going through a divorce is the impact it has on their retirement savings. Research from the National Institute for Retirement Security finds that divorced women have roughly 50% less retirement savings than married women, illustrating how divorce can permanently reshape retirement security. A 2025 retirement study found that nearly one in four divorced, separated, or widowed women in the United States has less than one month of retirement savings, underscoring the urgent need to rebuild retirement security after marital transitions. While the process of rebuilding your retirement nest egg can feel daunting, it is not insurmountable. In this article, we will explore practical steps you can take to secure your financial future post-divorce.
Understanding the Impact of Divorce on Retirement Savings
When a marriage ends, it’s common for couples to divide their assets, including retirement accounts. Depending on the laws in your state and the terms of your divorce agreement, you may have to split retirement savings accrued during the marriage. Most commonly, these retirement accounts are pre-tax accounts that have specific restrictions in terms of transfer and withdrawal/transfer. This can leave you with less than you anticipated for your retirement.
Moreover, many women may have taken time off from their careers to raise children or support their spouse’s career, which can affect their post-divorce earning potential and retirement savings. Understanding the specific impact of your divorce on your retirement is the first step in rebuilding your financial future.
Assess Your Current Financial Situation
Before you can begin rebuilding your retirement savings, it’s essential to take a comprehensive look at your current financial situation. Start by gathering all relevant financial documents, including but not limited to:
- Bank statements
- Brokerage statements & investment portfolios
- Retirement account statements
- Income sources
- Monthly expenses
Create a detailed budget that outlines your projected income, fixed expenses, and discretionary spending. This assessment will provide you with a clear picture of your current financial health and help you identify areas where you can save or invest more effectively. Be conservative when using expense estimates since unexpected costs can throw off your plan.
Create a Post‑Divorce Financial Roadmap
Once you have a clear understanding of your finances, it’s time to develop a new financial plan. Here are some key elements to consider:
- Set Clear Goals: Determine what you want to achieve financially in the short-term and long-term. This might include saving more for retirement, buying a home, or funding your children’s education.
- Emergency Fund: Establish an emergency fund to cover unexpected expenses. Aim for three to six months’ worth of living expenses to provide a financial cushion.
- Retirement Accounts: If you qualify to contribute to an IRA and don’t have one, open an Individual Retirement Account (IRA) or a Roth IRA. Contribute as much as you can to take advantage of tax benefits associated with these accounts. Be sure to consult with your tax preparer as to how much you can contribute and avoid overfunding.
- Employer-Sponsored Plans: If you are re-entering the workforce or have a job that offers a 401(k) plan, make sure to enroll and contribute to it, especially if your employer offers matching contributions. Do your best to maximize your contributions.
Explore Ways to Boost Your Post‑Divorce Income
Rebuilding your retirement savings often requires increasing your income. The financial shock of divorce is often dramatic. According to the U.S. Government Accountability Office, women’s household income falls by about 41% after divorce—almost twice the decline experienced by men. Here are some strategies to consider:
- Return to Work: If you took time off during your marriage, consider re-entering the workforce. Update your skills or take courses to enhance your employability in your desired field.
- Explore New Career Opportunities: Look for job openings that offer better pay or benefits. Consider networking to connect with potential employers or explore freelance opportunities to supplement your existing income.
- Start a Side Business: If you have a passion or skill that can be monetized, starting a side business can provide additional income to help boost your savings.
Rebuild Smart: Investment Strategies After Divorce
Once you have a steady income and a budget in place, it’s essential to invest wisely to grow your retirement savings. Here are some investment strategies:
- Diversify Your Portfolio: Ensure your investment portfolio is diversified across various asset classes, such as stocks, bonds, and cash. This can help manage risk and enhance your potential for growth.
- Consider Your Personal Risk Tolerance: Your investment strategy should align with your risk tolerance and time horizon. If you’re closer to retirement, you may want to adopt a more conservative approach.
- Stay Informed: Keep yourself updated on market trends and investment opportunities. Remember that investing requires a long-term mindset. Consider working with a financial advisor who can help you navigate the complexities of investing and monitor your progress especially if you’re new to it.
Seek Professional Guidance
Navigating the financial landscape post-divorce can be challenging. Seeking professional guidance from a financial advisor or a divorce financial planner can provide invaluable support. They can help you create a customized financial plan, offer investment advice, and assist in navigating complex financial decisions.
Consider consulting with a divorce attorney who specializes in family law to ensure that your divorce settlement is fair and that your retirement assets are appropriately handled.
Stay Committed and Patient
Rebuilding your retirement savings after divorce will take time and discipline. Stay committed to your financial goals and be patient with yourself. Celebrate small milestones along the way, whether it’s reaching a savings target or successfully sticking to your budget.
Conclusion
Divorce can be a challenging time, but it also offers an opportunity for personal growth and financial independence. By understanding your financial situation, developing a new plan, maximizing your income, investing wisely, and obtaining professional guidance, you can successfully rebuild your retirement savings. Remember, it’s never too late to take control of your financial future. With determination and the right strategies, you can create a secure and stable retirement for yourself.
Charles F. Vuotto, Jr., Esq. is Of Counsel and a member of the Family Law Practice Group at A.Y. Strauss, LLC with offices in Livingston, NJ and NY. Mariella Foley, CFP®, CDFA®, is a Partner and Wealth Advisor with Cerity Partners in Westfield, New Jersey. To learn more about Mariella’s practice, click here. To learn more about Cerity Partners’ approach to Women’s Wealth, click here.
