Financial Renewal: Strategic Financial Planning After Divorce or Loss
By: Lisa Manzolillo, CFP®, CDFA®
I’m Lisa Manzolillo, Director and Client Advisor at Simon Quick. With over 20 years in wealth management, I specialize in supporting individuals to navigate significant life transitions such as divorce, widowhood, or retirement. My role involves crafting personalized financial plans that resonate with the unique goals and circumstances of each of my clients and I use my extensive experience to guide people through their most challenging financial decisions with compassion and precision.
Unexpected life events, such as a divorce or the loss of a spouse, can upend even the most well-thought-out financial plans, particularly for high-net-worth individuals. These challenges, often unforeseen, require a tailored financial strategy to suit your new lifestyle and needs. During these transitional times, taking proactive steps to get you back on track is crucial. This article will offer guidance to help you navigate the financial complexities that often arise from these significant life changes.
Assess Your Current Situation
Firstly, reassess your financial situation—your assets, income, debts, and ongoing obligations are a great place to start. Understanding these foundational pieces will help you formulate a responsive plan that will set you up for long-term financial success.
Consult a Financial Advisor
Navigating financial upheaval alone can be daunting. Instead, partnering with a financial advisor can offer you support as you adapt to new circumstances. They provide advice, whether you're managing your finances independently for the first time or need to reassess your investment strategies.
For my clients navigating widowhood or divorce, I begin by analyzing their current financial status and new needs. This helps me understand how these changes can affect long-term objectives so we can develop a plan that is customized for their new life circumstances and goals.
As a Financial Advisor at Simon Quick my mission is to support you during these challenging times and to establish a new financial foundation that can give you confidence and clarity moving forward.
Revise Your Budget
Adjust your budget to reflect any changes in income and expenses so you can sustain your lifestyle and financial obligations.
For example, your income may change after a divorce, along with your assets and net worth. Following the death of a spouse, you may be managing your household finances for the first time. In your new budget, figures should be adjusted with your new circumstances to ensure that you can continue to meet financial responsibilities like paying your mortgage or rent, car, insurance, etc.
Estate Planning and Insurance
When faced with a significant life change, such as divorce or the death of a spouse, it’s crucial to update your estate plan, insurance policies, and beneficiary designations. This ensures that your assets are distributed according to your new wishes and circumstances.
Divorce. If you are recently divorced, remove your ex-spouse from your estate plans. This includes revising your will, living will, and any healthcare directives to prevent your ex-spouse from making critical decisions on your behalf. You wouldn’t want your ex-spouse to oversee life-or-death decisions or to inherit your 401(k).
Spousal Death. In the event of a spouse's death, you might need to redirect your assets to other beneficiaries, such as your children or a charity. Updating your beneficiary designations on retirement accounts, life insurance policies, and other financial accounts are necessary steps to ensure your wishes are honored.
Review all your insurance policies, including car, home, and life insurance, to remove your ex-spouse or deceased spouse from the policies. Inform your insurance companies about your change in status to adjust coverage accordingly and to avoid any unnecessary liabilities.
For widows or widowers, deciding when to take Social Security benefits is a significant decision. Widow benefits can be claimed as early as age 60 (or 62 for some benefits). Understanding the best time to apply for these benefits can significantly impact your financial situation.
Building an Investment Portfolio
These unexpected life events might impact your saving and investing plans, especially if your income decreases. While it’s probably okay to put these plans on the back burner for some time, it’s important to devise a plan for resuming saving and investing strategies as soon as it’s financially feasible so you don’t fall too far behind on your financial goals.
After assessing your financial situation, the next step is to rebuild or adjust your investment portfolio to align with your new financial goals. This involves balancing your need for income with the need for long-term financial growth.
Depending on your current financial resources, your priority might be to rebuild your liquid savings. A good rule of thumb is to accumulate up to six months of living expenses in a liquid savings account that you can tap into in the event of a financial emergency. If your liquid assets have been depleted, concentrate on rebuilding a cash balance first.
Time missed for retirement savings and investments is time that cannot be recovered. Every lost year could jeopardize your long-term financial growth. Therefore, it's essential to resume retirement contributions as soon as you're financially able to.
An income-focused investment strategy can help you meet immediate expenses. This might involve investing in dividend-paying stocks, bonds, or other income-generating assets to create a steady cash flow.
A growth-focused strategy, on the other hand, is aimed at building wealth over the long term. This involves investing in assets that have the potential to appreciate over time, such as stocks and ETFs.
Depending on your situation, a combination of income and growth strategies may be appropriate. Your financial advisor can help you determine the best mix based on your current needs and future goals.
A Good Time to Purge
A major life event can also be an opportune time to declutter and streamline your possessions. Selling items you no longer need, such as unused furniture, electronics, or collectibles, can generate extra income to help cover immediate expenses or meet other financial goals. You could also donate items to a favorite charity for a tax deduction.
Consider selling big-ticket items like a boat or other toys. Not only will this generate cash, but it will also save on ongoing costs such as maintenance, storage, and insurance.
How Simon Quick Can Help
Navigating the financial aftermath of a significant life event can be overwhelming. A financial advisor can provide the guidance and support you need to regain your financial footing.
At Simon Quick, we specialize in supporting individuals to manage their finances during challenging and fluctuating times. Contact us at (973) 525-1000 or email info@simonquickadvisors.com to discuss your situation and learn how we can help you create a new financial plan tailored to your needs.
Reach out to us to discover how we can help you secure your financial future in light of your recent changes.
About Lisa Manzolillo, CFP®, CDFA®
Director / Client Advisor / Principal
Ms. Manzolillo joined Simon Quick in 2018 and she has over 20 years of wealth management experience. Lisa is passionate about financial planning and working with individuals and families to create a plan that incorporates their goals and values. Lisa also specializes in working with women going through life transitions such as a divorce, widowhood, or retirement. Ms. Manzolillo serves as the chair of Women@SQ, which is dedicated to educating and enhancing the personal and professional lives of women in the Simon Quick network.
Prior to joining Simon Quick, Lisa worked as a financial advisor at Morgan Stanley and UBS where she provided financial planning and investment management services to high-net worth individuals and families. She began her career in a variety of roles on Wall Street including positions at Merrill Lynch and Deutsche Bank.
Ms. Manzolillo graduated summa cum laude from University of Rhode Island with a Bachelor of Science in Accounting and earned an MBA with a finance concentration from Fordham University. She became a CERTIFIED FINANCIAL PLANNER™ practitioner in January 2008 and in 2017, Lisa became a Certified Divorce Financial Analyst (CDFA). In 2021, Ms. Manzolillo was made a principal of the firm in recognition of her hard work and dedication.
Outside of work Lisa is the proud mother of two children and enjoys paddle tennis, pickle ball, downhill skiing, and water skiing.
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