Begin With Your Destination in Mind: A Comprehensive Financial Plan | Prosperity Planning, Inc.​

Dan Reiter, CFP®, CPA

"The only limit to our realization of tomorrow will be our doubts of today." This quote by Franklin D. Roosevelt perfectly captures the essence of navigating the post-divorce landscape. While uncertainty may loom, a well-organized financial plan can be the root that fosters your future security.

It is without question that a divorce is a significant change in one’s life financially. Entering a divorce may feel like you are steering a boat into a storm with no concept of what is on the other side or how long it will take to get there. However, amid the waves and turbulence, you are thrust into taking responsibility for the wheel and make life altering decisions to navigate it. No prior experience required.

Starting to create a plan at this stage, before you agree to a divorce settlement, is what gives you the map to help you chart your course and arrive on the other side of the storm as intact as possible.

To have confidence in any divorce settlement you accept, you must first have clarity in the outcome that results. A good comprehensive financial plan will answer questions such as:

• Can I afford to keep the marital home?
• What types of marital assets would it be better to retain given my financial goals?
• How does my tax situation change if I accept more pre-tax funds?
• Will I need to return to the workforce?
• Will my lifestyle change after divorce?

Understanding the financial implications of dividing assets in divorce negotiations will give you confidence that you are asking for the right things. For instance, you may find that you cannot both afford your mortgage and maintain the lifestyle you desire. With a financial plan, you may recognize it is in your best interest to prioritize other marital assets rather than maintaining sole ownership of the home, saving you from reentering the workforce or retiring later than originally planned.

A good financial advisor will be able to answer these questions with you and clarify your priorities throughout the settlement negotiation process. The outcomes and answers should be reevaluated as the settlement conversation evolves. Ultimately, the financial plan and forecasts should be a crucial tool in giving you clarity and confidence in reaching a settlement that best aligns with your goals and priorities.

Qualities of a Comprehensive Financial Plan

To serve your needs, a comprehensive financial plan should do the following:

• Begin With the Desired Outcome: A comprehensive financial plan should steer you toward your financial goals. What is your ideal monthly income? What other intermediate or longer-term financial goals do you have? Is the current balance of your investments likely to be sufficient to meet your goals, or do you need to make adjustments to ensure long-term financial security? Your plan should start by clearly answering all these questions.
• Optimize Opportunities: A well-crafted financial plan goes beyond simply managing your current situation. It identifies potential financial benefits you may not have considered, such as tax deductions or investment strategies tailored to your unique circumstances. By exploring these opportunities, you can maximize your financial potential and work toward achieving your long-term goals. Think of it as unearthing hidden treasures in your financial landscape—resources that can accelerate your progress toward financial security and open doors to new possibilities.
• Minimize Risks: Life after divorce can bring unforeseen circumstances. A financial plan should address how to anticipate and mitigate potential risks, such as unexpected expenses or market fluctuations. By incorporating strategies to address these risks, such as building an emergency fund and diversifying your investments, you can build a financial safety net that protects you and your future.
• Provide A Clear Plan of Action: Finally, a quality financial plan should be actionable. Once you are clear on your desired outcome, your financial plan should detail the path to get there while navigating through different opportunities and risks. What are the specific and detailed steps to reduce risks or maximize opportunities? Which steps should be taken first? A good plan leaves nothing ambiguous.

Divorce may be a challenging chapter, but with a well-defined financial plan, you can navigate uncertainty and cultivate a secure and fulfilling future. By taking charge of your finances and seeking professional guidance from a qualified advisor, you'll be empowered to turn doubts into possibilities. As your life and financial goals evolve, communicate regularly with your advisor and adjust your plan accordingly. With dedication and a proactive approach, you can build a strong financial foundation for your next stage of life.

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 Investment advice, financial planning, and retirement plan services are provided by Prosperity Planning, Inc., an SEC registered investment advisor. The information contained herein, including but not limited to research, market valuations, calculations, estimates and other material obtained from these sources are believed to be reliable. However, Prosperity Planning, Inc. does not warrant its accuracy or completeness. The information contained herein has been prepared solely for informational purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or to participate in any trading strategy. If an offer of securities is made, it will be under a definitive investment management agreement prepared on behalf of Prosperity which contains material information not contained herein and which supersedes this information in its entirety. Any investment involves significant risk, including a complete loss of capital and conflicts of interest. The applicable definitive investment management agreement and Form ADV Part 2A will contain a more thorough discussion of risk and conflict, which should be carefully reviewed before making any investment decision.