Once the dust settles and the papers are all signed, many newly divorced individuals find that they have a new set of decisions to make. Among these is what to do with the proceeds gained from the property division process. For Massachusetts resident who are emerging from divorce, it may be tempting to put off making additional decision, especially if the divorce was contentious or lengthy. However, letting one’s divorce proceeds simply sit in the bank is never the most financially savvy option.

The money that comes as a result of divorce is best put to use in building financial security for one’s future. Whether that means establishing emergency savings, investing in a retirement plan or purchasing a mix of stocks and other investment vehicles, the choices made at this stage can greatly affect one’s finances in the years to come. In addition, there is a great deal of benefit gained from taking a proactive stance toward one’s finances, especially for parties who were not involved in the financial management aspects of the former marriage.

Retirement planning should play a role in how divorce proceeds are allocated. In some cases, divorced spouses who were married for at least 10 years can claim benefits from the Social Security record of their former spouse. This is not, however, a comprehensive retirement plan, and should be considered as a means of supplemental retirement income only.

The best method of determining how to invest for retirement is to asses existing finances and then estimate income needs at retirement age. From there, one must determine what level of risk they are comfortable with. Factoring all those variables in, it is possible to devise an investment strategy that can take the property division proceeds from a Massachusetts divorce and put them to work toward retirement goals.

Source: Fox Business, “Best Use of Divorce Cash Before Retirement?” Dr. Don Taylor, April 8, 2013