Carefully managing your money can be a balancing act. This is especially true for those who have just gone through a divorce. And things can get even more complicated when divorce occurs after 50. Black Enterprise spoke with TIAA-CREF Certified Financial Planner Shelly-Ann Eweka for more insight into managing your money after you say â€œI donâ€™t.â€ Here is part two of that interview.
BE: What are some of the negative financial implications of divorcing after 50?
EWEKA: One major problem that people going through a divorce face are problems with debt. They see their debt increase sometimes because theyâ€™re getting a handle on managing their day-to-day and monthly finances without the extra income they once had. So itâ€™s important to make smart financial decisions going forward so that you donâ€™t get into any more debt than you might be in already. Second, having to possibly move out might bring on financial hardship. Your lifestyle might have to change. If you have to get a new home, especially if youâ€™ve lived in your current home for a while, homes may be a lot more expensive in the area you want to live in. And youâ€™re most likely going to have to scale back your lifestyle. You may not be able to do the things that you used to do.
BE: What are some ways to make up for the financial shortfall, especially when it comes to retirement savings?
You can start by contributing more to your retirement plan. People over 50 can put an extra $5,500 dollars into their retirement account annually [such as a 401(k), 403 (b), SARSEP, and governmental 457 (b)]. You can also put an extra $1,000 into an IRA or Roth IRA each year, based on your eligibility. You can take advantage of what they call â€œcatch-upâ€ contributions in those plans. You should also be realistic about how the divorce has affected your financial situation. You may want to consider working a little longer or taking Social Security a little later. If you want to maintain your lifestyle, but you donâ€™t have enough income on your own to do that, youâ€™ll have to think of ways to add income. It could be by going back to school so that you can get a higher-paying job, or it could be by getting a part-time job. It could be something as simple as dog walking or babysitting. Just think of creative ways to bring in additional income.
BE: How can one spouse see if they qualify for the other spouseâ€™s Social Security benefit?
EWEKA: Often people donâ€™t think about what benefits they may have from an ex-spouseâ€™s Social Security. Make sure that you keep your spouseâ€™s Social Security number. You can go directly to the Social Security Administration to see what youâ€™re eligible for. And there are two potential benefits that you might be eligible for as a divorced spouse. One would be a spousal benefit. If you were married for 10 years or more, you may be eligible for this benefit. And that spousal benefit may even give you a higher benefit than your own benefit would. The other benefit that you would be eligible for is the survivor benefit. You are eligible for this if your former spouse passed away.