How to Retire Without Your Spouse: Investment Strategies for the Divorced or Widowed

Divorce has become increasingly common in the United States over the past few decades, and roughly 25 percent of people 65 or older are widowed. Despite this, however, approximately two-thirds of married couples don’t have a financial plan set up in the case of divorce or widowhood.

What happens if you do become divorced or widowed either when retirement is imminent or once you’re retired? Are there investment strategies that can help in either scenario?

In our more than 30 years of experience, we know how vital it is to have a roadmap, because the financial considerations of either situation can be complex and significant. You could lose a great deal to poor or nonexistent planning, both in terms of potential income and drains on that income, like taxes.

At Heritage Capital, management of your assets in either situation is a specialty of ours. Losing a spouse or partner, either through death or divorce, can be difficult financially as well as emotionally. We specialize in helping clients get organized and back on track, so they feel confident again about the future. We’ve helped widowed and divorced clients plan and invest in a way that helps them achieve their goals – and avoid common mistakes that are made when emotions are high.

Below are some simple tips for how to plan your retirement if you’re divorced or widowed.


Heritage Capital specializes in helping clients get organized and back on track. Schedule a conversation to see how we can help you.


Review and Re-Assess Your Financial Plan

The very first step when you experience one of these life-changing events is a review and re-assessment of any existing financial plan you had when married, for both the divorced and the widowed.

A comprehensive financial plan consists of the following:

  • Budget (statement of income and expenses)
  • Investment strategies
  • Retirement plan
  • Educational savings plan (for children and grandchildren)
  • Risk management (insurance)
  • Estate plan (wills and powers of attorney)

First, get a handle on any changes in your income and expenses. Will you remain in the same house, or will you downsize? Work with a financial advisor to assess your available income and its sources. Will they change? How so?

Gather the paperwork for all the categories in your financial plan. It’s important to know what exists in terms of assets in all categories, as well as insurance and wills.

You’ll also want to assess your need for further insurance. For example, you may not need life insurance if you no longer have dependents. Align your insurance with your assets, such as a home and car.

In all probability, any last will and testament you have requires revision if you become divorced or widowed. Be sure to review the beneficiaries and bequeathing of assets to make sure they match your existing obligations and wishes, and not that of your spouse.

Retirement Plans

Next, you should assess your assets and likely retirement income. The steps here are slightly different for divorced and widowed people.

Divorce Concerns

If you and your spouse had Individual Retirement Accounts (IRAs), you can split them rather simply in the divorce decree. Often, the split is done mathematically: If you own half and your spouse owns half, the total amount is divided by 50 percent, for example, regardless of whose name the funds are currently held in. Other couples choose to split them by whose name is on the paperwork.

In the case of defined contribution plans, on the other hand, such as 401(k)s, it’s quite different. The spousal division of 401(k)s requires a Qualified Domestic Relations Order (QDRO). QDROs are judgments, decrees or orders regarding marital property. They apply to 401(k)s and other divisions of property.

In either case, it’s important to obtain a full accounting of the funds you are entitled to and to roll over any tax-advantaged funds in similar accounts within the time period that will preserve their tax status.

Widowed Concerns

If a widow(er) is a spousal beneficiary of a retirement fund such as an IRA or a 401(k), he or she can either inherit the accounts or choose to be the beneficiary.

Being a beneficiary can be advantageous if you are older than 59-½ and don’t need income, as you can let the accounts grow until you reach the age when the IRS mandates Required Minimum Distributions (RMDs) to begin from retirement accounts. This is age 70-½ if you were born before July 1, 1949, or age 72 if you were born on July 1, 1949 or later.

Social Security Benefits

When it comes to Social Security benefits, there are similar concerns for both the divorced and the widowed.

For example, if your spouse earned Social Security benefits, you may be entitled to them if you’re widowed or divorced. The similarities and differences are outlined below.

To qualify for spousal Social Security, any Social Security benefits under your own employment record must be less than the spousal benefits you’re entitled to.

If you divorce and you are eligible for Social Security through both your own and your ex’s account, the Social Security Administration (SSA) pays from your own account first. Should the benefits on your former spouse’s account be higher, the SSA adjusts your total benefits so you receive the higher amount.

If a spouse or ex-spouse dies and you are eligible for their Social Security benefits, you will become eligible for a monthly survivor’s benefit in addition, as long as you meet the requirements above. The lump sum is currently $255. The benefits will stop if you remarry before a specific age.

Divorce Concerns Only

To qualify for divorced spouse benefits, you need to have been married for 10 years or more, regardless of when the divorce took place, unless you remarried.

If you are currently married, you are not eligible. You are eligible, however, if you remarried and that marriage also ended.

You become eligible to claim spousal Social Security at the age of 62. But if you claim benefits between that age and your full retirement age, the amount you receive is reduced permanently.

If you qualify, you are eligible to receive 50 percent of your spouse’s Social Security benefit when you retire at your full retirement age.

Widowed Concerns Only

Widow(er)s who have been married for at least nine months become eligible for survivor Social Security benefits if their spouse was eligible once they turn 60, an earlier age than divorced spouses.

If you take survivor benefits at your full retirement age, you will receive 100 percent of your spouse’s benefits. Like a divorce, however, the amount is permanently reduced if you take these benefits before then.

Widow(er)s who remarry before the age of 60 are no longer eligible for survivor benefits.


As you can see, retirement considerations for the divorced and widowed are complex. Navigating this transition in life can be difficult, so it’s crucial to discuss your specific situation with a financial advisor who understands the issues that can arise in these times.

A common mistake is to take these concerns on yourself when emotions are high. Even small mistakes can have a big effect on your financial future. Unfortunately, we see this happen a lot. Read our recent blog post: 3 Common Retirement Planning Mistakes.

If you’re looking for a new financial advisor who can help you navigate your financial life without your spouse, contact Heritage Capital to see if we’re a fit.



Paul Schatz, President, Heritage Capital