Financial planning is an inherently subjective endeavor. There is no single formula for how much someone should save, how they should invest, when they should retire, or what their estate plan ought to look like. Yet much of the conventional financial planning framework is built around a traditional path: get married, get a joint bank account, buy a home, raise a family, save for retirement, retire together, leave your assets to the adult children you’ve raised.

But for many families, life doesn’t follow that predictable path.

Divorce is not something for which one plans but it is, unfortunately, quite common. It can fundamentally change nearly every part of a financial plan at once – income, expenses, taxes, goals – every element of your financial life turned upside down. And while there is no shortage of information about the legal process, there is considerably less discussion about what comes next financially: How do you rebuild your financial life after a divorce?

Last year, Pew Research, a nonpartisan American think tank, released an analysis of federal data pertaining to divorce in the US*. Their findings include:

  • More than 1.8 million Americans divorced in 2023
  • One-third of Americans who have ever been married have also experienced divorce
  • 22% of divorces in 2023 involved marriages that had lasted at least 25 years
  • 66% of Americans who have divorced eventually remarry

Divorce doesn’t mean you just have half of what you did before. Average household net worth actually falls nearly 70%:

  • Currently divorced working-age adults: $98,700
  • Adults in their first marriage: $326,900
  • Remarried adults: $329,100

Median household income shows a smaller, but still significant difference:

  • Divorced: $84,900
  • First marriage: $118,600
  • Remarried: $114,600

Every divorce is different so there isn’t a one size fits all divorce reset.

Although there isn’t a uniform post-divorce solution, there are some key discussions you should be having with your financial advisor.

 

Topic 1: The Financial Reset After Divorce

  • What does my financial life look like now?
    • How do I adjust my household budget with 30% less income?
    • How much do I need for an Emergency fund?
    • What are the terms of my divorce and property division?
    • What accounts need retitling? What accounts need new beneficiaries?
    • What do I need to do about health insurance?
    • Do I need to adjust my tax withholding? What is my new filing status?

This is not to recreate the financial life you had while you were married: the first objective is to get a baseline.

Topic 2: Rebuilding Long-Term Financial Independence

  • Am I still on track?
    • How have my retirement projections changed? Do I need to save more?
    • What assets did I gain or lose under the QDRO agreement?
    • What Social Security benefits are available as a divorced individual?
    • How much am I saving and is it enough?
    • How will my children’s education be funded?
    • What are my major financial goals now?
    • How have my insurance needs changed?
    • How does my estate plan change? Do I have an estate plan?

The goal isn’t to catch up but to reset so you are working toward your goals, which are likely different than the ones you had as a couple before the divorce. What decisions do I need to make today that give me the best chance of achieving my goals?

Topic 3: Cleaning up Financial Loose Ends

  • Although the divorce may be final, divorce decrees don’t automatically update the rest of your financial life.
    • Beneficiaries
      • IRAs/401(K) and other employer plans
      • Life insurance and annuities
      • Brokerage and bank accounts
    • Estate Planning
      • Update documents
      • Will/Trusts/Power of Attorney
    • Property
      • Home/Mortgage
      • Loans/Debt
      • Joint accounts/credit cards

The financial separation is not done in the courtroom; you still must act on finalizing the financial separation.

Topic 4: Remarriage and Combining Financial Histories

  • Each person may arrive with:
    • Assets/retirement accounts
    • Homes/Mortgages/Debts
    • Children/child-support obligations/alimony
    • Different incomes/spending habits/retirement timelines
    • Estate planning objectives
  • How do we organize our new life together?
    • How will finances be held? Joint? Separate?
    • How will household expenses be divided?
    • What happens to assets each spouse brought into the marriage?
    • How will children’s expenses be handled?
    • Should there be a prenuptial agreement in place?

The financial conversation before a second marriage should often be more detailed than the first time around. There’s just more baggage on round two.

Topic 5: The Blended Family

  • Children from previous marriages bring an added layer of complexity to a blended financial picture. How do you plan your finances and estate now?
    • Household finances
      • Who pays for children’s educational expenses?
      • Do adult children still need support? From which assets does that support get funded?
      • Are financial expectations consistent between spouses? Children?
    • Estate Planning
      • Who inherits what?
      • How is the surviving spouse supported?
      • What is in place to protect the deceased spouse’s children? Trust? Will?
      • What assets support both the surviving spouse and the children?
      • What types of trust make sense in your situation?
      • Can life insurance be used to equalize inheritances?
    • Retirement
      • Reconciling age gaps or retirement targets
      • How to coordinate Social Security

Traditional estate planning often assumes that spouses have the same beneficiaries; in a blended family, that may not be the case. Leaving everything to a surviving spouse provides no guarantee that the deceased spouse’s children inherit anything. Trusts, beneficiary designations, life insurance, property titling, and prenuptial agreements become significantly more important.

Naturally, these aren’t all the topics you’ll be dealing with in a divorce. Every individual is going to have their own set of problems to solve and priorities to set, and for that reason, the standard set of assumptions just won’t get the job done.

While these situations add complexity, the fundamental objectives remain the same. Understanding where you are today, what matters going forward, and how to make deliberate decisions that align your finances with these priorities are still the most important elements of a financial plan.

If you or someone you know are going through a divorce and don’t know where to start, schedule a consult with us today. We’ll help you to ask the right questions to make sure your plan stays on course— even if your life has changed direction.

 

*Source: Beshay. (2025). 8 facts about divorce in the United States. In Pew Research Center. https://www.pewresearch.org/short-reads/2025/10/16/8-facts-about-divorce-in-the-united-states/  

This information is presented for informational purposes only and does not constitute an offer to sell, or the solicitation of an offer to buy any investment products. None of the information herein constitutes an investment recommendation, investment advice or an investment outlook. The opinions and conclusions contained in this report are those of the individual expressing those opinions. This information is non-tailored, non-specific information presented without regard for individual investment preferences or risk parameters. Some investments are not suitable for all investors; all investments entail risk and there can be no assurance that any investment strategy will be successful. This information is based on sources believed to be reliable and Alhambra is not responsible for errors, inaccuracies, or omissions of information. For more information contact Alhambra Investments at 1-888-777-0970 or email us at info@alhambrapartners.com.