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How to manage money after a divorce

| Aug 13, 2018 | Divorce |

Losing retirement assets can be the hardest part of a divorce for Georgia residents and others. While they can be divided in a variety of different ways, it can leave a person less financially secure than he or she was before the divorce. Overall, those who have gone through this process have a net worth that is 30 percent less than those who have never ended a marriage.

However, those who are coming out of a divorce should understand that they have time to rebuild their savings. An individual can put up to $18,500 per year in his or her 401k, and that amount increases to $24,500 for those who over 50. Financial professionals say that it is a good idea to contribute the maximum amount if possible to allow for the greatest compound growth. Individuals may also want to contribute additional funds to a taxable investment account for use in emergency situations.

Those who are unable to contribute to a retirement account can take steps to help make the most of what they do have. For instance, a person may want to convert a traditional IRA into a Roth IRA as it can grow for a longer period of time. When combined with other sources of income, individuals can use such a strategy to create greater financial security for themselves in retirement.

In a divorce, most assets that are acquired during a marriage can be divided. This includes a marital home, money in a bank account and funds inside of an IRA or 401k. An attorney may be able to explain the process of dividing retirement funds in an effort to avoid triggering a taxable event while doing so. Legal counsel may also help a person take a more objective view during settlement negotiations.

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