Five Financial Steps for the Newly Single

Transitioning to a single life isn’t easy, whether due to divorce, separation, or losing a partner. Finding emotional ballast when your personal life is adrift is crucial, but you must also attend to more practical matters — including taking financial steps to secure your future.   

Each of us will have a different “to-do” list, but here are some essential first steps to consider when taking stock of your financial life as a newly single person.    

1) Take Charge of Your Finances

You’ve lost a partner or officially signed a divorce decree. You’ve overcome the most challenging part, but there is still financial work.  

Once your marital status changes due to death or divorce, start by ensuring you understand what assets must be updated. Distinguishing between assets tied to your ex-partner and those in your name alone prevents confusion and potential conflicts down the road.

Contact banks and other financial institutions and change how financial accounts are titled or move assets from joint accounts to your accounts. If you owned property together, clearly establish that property’s future. There may be a need to transfer title on personal property like cars or boats or execute a quitclaim deed on a home. This establishes your financial autonomy and ensures your financial identity is distinct from your former partner’s.

Don’t forget about debt! Creditors must be aware of someone’s passing or the dissolution of a financial partnership. For example, if you owned a home with your former partner and both of your names were on the mortgage, a quitclaim deed will not remove your name from the loan.   

2) Secure Your Legacy

When you are newly single, your estate plan may reflect former priorities and named individuals who are no longer relevant.

It’s important to update your will, trusts (if applicable), powers of attorney, and beneficiary designations. Remember that life insurance policies have beneficiaries, too – just like retirement plans. This ensures you are disinheriting your ex-partner and distributing your assets according to your wishes.

Estate planning can be complex and state-specific, so consider working with an estate attorney who can help you navigate.

Remember that changing the title on an account is a separate exercise from updating beneficiaries, so it’s important to follow up on accounts that may not be in your name but may include you as a beneficiary.

If you have adult children, it’s also a good time to discuss their personal estate planning. If they already have documents, they should make the appropriate updates (e.g., removing a deceased parent as their named agent or discussing who best to utilize as an agent post-divorce).

Are you navigating the complexities of DSUE and estate tax laws? Consult with a knowledgeable estate planning professional.

3) Reevaluate Your Budget and Goals 

Single life can feel expensive; many formerly shared expenses need to be carried on your own. For many, managing finances after death or divorce means making tradeoffs you never had to consider during a partnership.

Establish a new budget so that you have a solid understanding of your new lifestyle. Itemize your income sources (e.g., work, investments, marital/child support if applicable) and your essential, day-to-day expenses (e.g., recurring bills, groceries, loan payments). This will help provide a clearer picture of what you can go towards discretionary expenses and how much you have to save or invest.

Shifting a budget is typically accompanied by shifting personal financial goals, too. Your household income may have decreased, but you are also only planning for your individual retirement as well.

Start small by focusing on setting aside cash for an emergency fund. From there, you can map out short and long-term goals and the resources required. This could look like refinancing or consolidating debt, adjusting contributions to retirement accounts, or enlisting the help of a financial planner.

Further Reading: Financial Planning During the Divorce Process

4) Conduct Your Financial Due Diligence

Check your credit report and understand your score and the listed accounts. Identify any remaining joint credit accounts or cards and move towards closing them or having your name removed.

A clean financial break is probably ideal, but shared commitments may benefit from shared accounts (e.g., one account or credit card both parents use for all child-related expenses).

Double-check your Social Security situation and create an account on www.ssa.gov if you haven’t previously so that you can access up-to-date statements. Depending on your situation, you may be eligible to receive benefits based on a past partner’s record, so getting your arms around this is essential.  

To qualify for spousal retirement benefits after a divorce, the marriage must have lasted at least ten years, the divorced individual must be unmarried, both parties must be at least 62 years old, and the ex-spouse must be eligible for Social Security retirement benefits. If the individual remarries, they generally cannot claim benefits based on their ex-spouse’s record unless the subsequent marriage ends by death, divorce, or annulment. A divorced spouse can receive up to 50% of their ex-spouse’s full Social Security retirement benefit, provided they meet these qualifications. If the individual is also eligible for benefits based on their work history, they will receive the higher of the two amounts—not both. Sometimes, an individual can collect their own Social Security retirement benefits and those based on their ex-spouse’s record; however, the total amount received will not exceed the higher of the two benefit amounts. This provision offers additional support while ensuring individuals receive the maximum benefit.

5) Build your team

These steps are all foundational; within each, there are nuances and exceptions to navigate. Doing this alone may feel overwhelming (as if you weren’t already doing enough by yourself these days!).

Many people benefit from having a Personal CFO team around them to help them move in the right direction: from investments, taxes, and executive compensation, to retirement, estate planning, and charitable giving. 

No one wants to sacrifice their financial health in the face of personal upheaval. Gaining control of your finances gives you peace of mind and options as you move into your next life stage.