As a Texas divorce comes to a close, both parties will experience a significant change in their financial situations. Whether for better or worse, the financial landscape that follows a military divorce and division of benefits will be different from what was in place prior to the separation. This leaves newly divorced individuals with the need to structure a new financial plan. While many people are intimidated by this process, others embrace the chance to design their own financial plans for the future.
One of the first things that must be determined after a divorce is the level of financial risk that an individual can tolerate. This is different for everyone, as no two people will have the exact same set of post-divorce needs and goals. Redefining those goals is a great place to begin. For example, people who are nearing retirement age and will lose a considerable portion of their retirement savings during divorce will have a different set of needs than those who are in their early 30s and are still establishing their careers.
In terms of investments, individuals should begin by listing each type of investment in their new portfolio. This includes bonds, real estate and equities. From that point, it is possible to evaluate the level of risk of the entire portfolio by examining the percentage of assets that pose a higher risk compared to those that are relatively low in risk. If the balance is off, it is time to liquidate assets that do not fit the goal and convert that wealth into asset types with the proper level of risk.
Restructuring an investment portfolio can be a challenge, especially for Texas spouses who did not play an active role in the family’s financial management prior to a military divorce. However, attaining the right blend of investments is essential for creating a foundation for future financial success, and it is worth the time and effort. Both parties will have new needs and goals after the division of benefits. In some cases, hiring a financial advisor can assist in this process.
Source: The Huffington Post, “Newly Divorced? Focusing On Finances Can Help You Move On“, Bob Stammers, Jan. 29, 2016