Family Issues

Managing after a divorce
17 SEP 2013

Tips for Managing Your Finances After a Divorce

By Bob Donaldson

Divorce is often a stressful event, both emotionally and financially. If you're in the process of a divorce proceeding (or have recently been through one), it's normal to be worried about your financial situation. Settling into a new financial life takes time, but there are things you can do today to help prevent divorce from taking a bigger toll than necessary. Here, we offer guidelines to help you stay financially secure, today and into the future.

Your financial picture

Create a personal financial statement. A personal financial statement is a great way to keep track of your monthly income and expenses. Try separating basic, have-to-pay expenses from discretionary items so you can see where you have flexibility to make changes. Do you earn enough to continue your pre-divorce lifestyle? If the answer is no, figure out ways to trim your expenses, such as cutting back on dining out and looking for ways to save on groceries.

Continue to save. Even if your goal is to pay down debt, it's important to set aside some money for an emergency fund and long-term savings. If you contribute to a 401(k) plan, be sure to take advantage of any employer match, which is essentially "free money."

Check on your credit. A divorce can play havoc with your credit through no fault of your own. You can request a free copy of your credit report from the three major credit reporting agencies
TransUnion, Experian, and Equifax—through If you notice problems that were caused by your ex-spouse, submit an explanation to the credit bureau.

Getting organized

Review the status of the divorce settlement. It's a good idea to verify that both parties have completed their obligations, such as refinancing a mortgage into one name or removing the other's name from credit cards. If a portion of your ex-spouse's retirement assets was supposed to be segregated for you through a qualified domestic relations order, verify with the plan administrator that it has been done.

Retitle property. If you haven't done so already, change the ownership of property according to the terms of your divorce settlement.

Inform the social security office of your new status. One of the few things that can't be done online, a name change requires a visit to your local social security office. Don't forget to bring originals of your proof of citizenship and identity, as well as the divorce decree. After you receive a new social security card, you can update other identification, such as your driver's license.

Organize your financial records. Whether they're scanned and stored in your computer or locked in a safety deposit box, it's important to keep your documents organized and at the ready. Give a list of their locations to someone you trust, along with a list of contact numbers for people who should be notified in an emergency.

Simplify your payments. Many banks offer online bill payment services that can help you automate your money management. Just set the future payment dates online and let the bank pay your bills automatically.

Insurance considerations

Review your policies and update beneficiaries. If you're working, look into your employer's disability benefits and consider a supplemental policy to replace your income in the event you become disabled. If you're not working, explore long-term care insurance, which will allow you to receive care in your home if you can't care for yourself.

Now that you're single, be wary of letting your life insurance policy lapse, especially if you have family members who depend on you. Also check on your homeowners and auto insurance, and make any necessary adjustments.

In addition, don't neglect to select new beneficiaries for your life insurance, retirement accounts, and transfer-on-death brokerage accounts (unless your divorce settlement prevents you from doing so).

Consider applying for COBRA health benefits. Under COBRA, you may be eligible to continue health insurance through your former spouse's employer for at least 36 months. Keep in mind that there is a deadline to apply for these benefits.

Financial planning

Execute new estate planning documents. Your ex-spouse's fiduciary appointments or beneficial interests are not necessarily terminated upon your divorce. Consider updating your will, trusts, powers of attorney, health care proxies, and living will.

Reassess your investing risk tolerance. We can review your investment plan with you and help you determine if it suits your new goals.

Taking control of your future

After the stress of a divorce, it never hurts to explore options for the future. This might mean considering a change of scenery, exploring a new career path, or maybe even going back to school. Whatever you decide to do once the dust clears, we're here to help you create a financial strategy for your next phase in life.

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.


To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

Robert Donaldson is a financial advisor located at Advisory Group West. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at (818-241-9061) or at (

©2013 Commonwealth Financial Network®



01 JAN 2014

The “Magic Age”: What You Need to Know About Social Security Claiming Strategies

By Bob Donaldson

You may have heard that choosing the right social security claiming strategy can help you and your spouse maximize your benefits. But which strategy is best? What's the appropriate age to claim? What about spousal benefits? If you're wondering which path to take, these social security basics may help you get started.

When is the right age to claim?

Retirees can apply for social security anytime between ages 62 and 70. But, until you or your spouse reaches your full retirement age (FRA), you won't be able to take full advantage of social security claiming strategies. For many of today's retirees (those born between 1943 and 1955), that "magic age" is 66.

When determining the best age to claim, keep these considerations in mind:

  • Claiming at 62 can permanently reduce not only your benefits but also your spouse's survivor benefits.
  • Claiming prior to FRA means you automatically apply for both your worker benefit and any additional benefits you qualify for as a spouse, assuming your spouse is already receiving benefits.
  • Claiming after your FRA allows you to take one benefit or the other, switching them at a later date, if advantageous.
  • Delaying your claim until age 70 maximizes your benefit and locks in the highest possible benefit for a widow or widower. Keep in mind, however, that you may need to bridge the income gap by drawing down your retirement portfolio.
  • A note on survivor benefits: A surviving spouse can claim either his or her own benefit or the survivor benefit independently prior to FRA, then switch to the other benefit after FRA.

Making the most of spousal benefits

It's a common assumption that, if both spouses delay claiming social security until age 70, they can maximize their monthly benefits. That's not always the case, however. To help ensure that you don't leave money on the table, here are a few possible strategies to consider. (Note that, for a couple to take advantage of these strategies, at least one spouse must have reached FRA.)

  • Claim the spousal benefit when one spouse reaches FRA. You can only earn delayed retirement credits on your own worker benefit, not by delaying the spousal benefit. If your spousal benefit will always be greater than your own benefit, it makes sense for you to take advantage of the spousal benefit sooner rather than later.
  • "Claim now and claim more later." With this popular strategy, you apply for social security at FRA but suspend payments until age 70. This allows your spouse to submit a restricted application for spousal benefits if he or she has also reached the magic age. In the meantime, both of you will continue to earn delayed retirement credits on your own worker benefits. Then, when each of you reaches ages 70, you can apply for your maximized benefits.
  • Claim the lower benefits first. If, for cash flow purposes, you have to claim before both spouses reach FRA, it may make sense for the spouse with the lower benefit to claim at 62; meanwhile, the other spouse waits until his or her FRA and files a restricted application for spousal benefits. Then, at age 70, the one receiving spousal benefits switches to his or her own higher worker benefit, and the other spouse can switch to the spousal benefit, if it's higher.

Beyond the basics

Clearly, when it comes to determining the optimum social security claiming strategy, numerous variables are at play. For instance, if you and your spouse have shortened life expectancies, a delayed claim may shortchange you. Your financial advisor can help you evaluate the benefits of different strategies and find the option best suited to you and your unique situation.

©2013 Commonwealth Financial Network®




How to Handle a Financial Windfall

By Derek McLaughlin

With every news story about the latest Powerball jackpot, it's only natural to wonder, "What would I do if I won the lottery?" Although your chances of hitting the jackpot may be slim, a financial windfall could well come your way through more ordinary means, such as the settlement of a lawsuit, a severance package, a family inheritance, or simply a larger-than-expected tax refund. Unfortunately, along with the obvious rewards, a windfall can be accompanied by plenty of potential problems.

When a large sum of money is thrust into their hands, otherwise smart people can make serious financial mistakes. In fact, as many as 70 percent of Americans who receive a windfall lose it all within a few years, according to the National Endowment for Financial Education. If you find yourself on the receiving end of a windfall—whether it's millions of dollars or a few thousand—following the advice outlined here will help you make the most of your good fortune.  

Before you do anything

In the initial rush of excitement, it may be tougher than you think not to make any quick decisions. Before deciding how to use your newfound funds, take a step back, think carefully about your situation, and assess all of your options. To avoid making choices you may regret later, keep these basic tips in mind:

  • Stay grounded and realistic about the amount of money you have. Remember, drawing too much attention to yourself may attract friends or distant relatives who are more interested in getting handouts than in your personal well-being.
  • Avoid hasty purchases on big-ticket items.
  • Establish a budget to keep from spending too much. One rule of thumb is to avoid spending more than 5 percent of your new funds in the first year of your payment. 

Know how much you really have. Oftentimes, recipients overvalue a windfall, failing to consider taxes and other factors. Some windfalls, such as insurance payouts, are tax-free. Lottery or severance payments may have taxes withheld before funds are paid to you, but you might need to set aside more money for taxes if the windfall pushes you into a higher tax bracket. Before visions of sports cars and mansions start to fill your head, be sure to put a real number on the money you have. 

Don't immediately quit your job. It's also unwise to assume you can stop working.You'll need to evaluate if you have enough money not only to replace your current income but to see you through retirement. Remember that, if you quit your job, you will stop earning income that contributes to social security and other retirement benefits.

Involve your advisor. As your financial advisor, we can guide you in the right direction and help you put your assets to best use. Working with your existing financial plan, we can strategically assess your options, taking into account tax considerations and your risk tolerance. We can also help you weigh the potential benefits of strategies such as trust funds and special types of life insurance.

 Spending wisely

Once you've evaluated your new financial situation, consider these smart spending tips:

Set aside emergency savings. If you don't already have a bank account or money market fund with enough to hold you over in case of a "rainy day," creating one should be a top priority. Ideally, you'll want to set aside sufficient funds to cover your expenses for 6–12 months (3–6 months at the least). Be sure to factor in all of your expenses, including your mortgage or rent, car payments, utilities, and groceries. 

Pay off high-interest debt. If you have any debt, getting it out of the way is likely a wise move. High-interest debt, such as credit card balances and payday loans, can be particularly worthwhile to pay off in the short term; the return on any investment you might otherwise make with that money isn't likely to offset the loss from high interest rates. 

Evaluate your health and retirement plans. Here are a few options to consider: 

  • Maximize your employer's retirement plan. If your windfall comes in the form of a bonus, it may be easy to transfer funds directly to your retirement account. 
  • Weigh the benefits of a Roth IRA. If your income level is too high, you can always contribute to a traditional IRA and convert. For more information, visit
  • If you contribute to a health savings account (HSA), think about paying all of your health care costs out of pocket and letting your HSA grow tax-free.

Treat yourself a little. Clearly, it's best to proceed with caution when making decisions regarding a financial windfall. At the same time, it doesn't hurt to enjoy a bit of freedom with your newfound wealth. Perhaps you'd like to travel to a place you've never had the extra money to visit or treat the family to a fancy dinner and night out. A small indulgence could actually reduce any urge you might feel to spend the funds unwisely.

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend that you consult a tax preparer, professional tax advisor, or lawyer.

Derek McLaughlin is a financial advisor located at Advisory Group West. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at (818 241-9061 or at (

©2013 Commonwealth Financial Network®



01 JULY 13

Curbing the Costs of Healthcare

By Robert Donaldson

Health care expenses are a major concern for people of all ages, from recent college graduates to those nearing retirement. While it's impossible to predict how much health care will cost in the future, there are a number of strategies that may help reduce the financial burden, whether you're close to retirement or have many years left to work.

Planning ahead for retirement

Unfortunately, retirement has become synonymous with steep health care costs. To help minimize your expenses and make things easier on yourself, here are some tips to consider as you approach retirement:

Review your current benefits. As you begin looking into health insurance options, it's important to have all the information regarding your current policy at the ready. Coverage, deductibles, and benefits change regularly, so be sure you're up to speed on the details of your plan. Knowing where you stand today will give you a head start in planning for retirement and may help you trim costs. 

Research supplemental insurance. Medicare is the primary source of health care coverage for Americans age 65 and up. Most retirees qualify for basic Medicare hospital insurance (Part A), which is free. It's important to note that Medicare medical insurance (Part B), which covers doctors' services, outpatient hospital care, and other day-to-day medical needs, requires a monthly premium. Although it can be time consuming to review all the options, purchasing private insurance to supplement basic Medicare may help offset expensive premiums. To compare coverage in your state and find insurers that offer the best value, visit 

Assess your employer's benefits. Some retired employees receive coverage from their employers instead of through Medicare. Employer-provided retirement benefits are becoming less common, however, so be sure to find out whether your company offers such a plan and if you are eligible.

Retiring early? Look into your options. Since Medicare isn't available until you reach age 65, consider other possibilities, such as:

  • Joining your spouse's health care plan
  • Paying to continue your current employer coverage for a specified time under COBRA
  • Purchasing your own personal medical insurance policy
  • Using Veterans Administration benefits (if you are a veteran) 

Consider other ways to save. Here are a few more ideas for covering health care costs in retirement:

  • Health savings accounts (HSAs), which may be offered by your employer's health care plan, allow you to set aside pretax funds to pay for medical care. Contributions are tax-deductible and can be withdrawn tax-free for health care costs. HSAs are portable, allowing you to take them with you if you change jobs, and they can be used for current health care or saved for future use; funds don't need to be used within a year.
  • Voluntary employees' beneficiary association (VEBA) plans may be available to school employees, state agency workers, and union members. With a VEBA, your employer contributes money to a trust on your behalf, which you can use to pay for current or future medical expenses. 
  • Working part-time is also an option. Many retirees continue working a reduced schedule in order to keep their health insurance benefits.

 Saving tips for everyone

No matter where you are in life, the commonsense strategies below may help you save money on health care costs.

Choose the right provider. Should you go to the ER if you break your arm? Most would say yes, but an urgent care facility may offer the same treatment for $1,000 less. Determining when you need to visit your primary care physician, a specialist, an urgent care provider, or a full-service hospital can play a big role in reducing costs.

Cut out unnecessary tests. Under Obamacare, certain preventative tests will be free if you use an in-network provider. Imaging tests such as MRIs, X-rays, and ultrasounds may still put a dent in your wallet, however. Keep in mind that, in many cases, these procedures aren't necessary to treat simple aches and pains. If you or a family member suspects a more serious condition that may require one of these tests, visit to compare prices.

Buy generic drugs. Most insurance plans have different copayment tiers for various brands of the same drug, including generic, preferred, and nonpreferred (the most expensive). Buying generic-brand drugs may be one of the easiest and most effective ways to cut back on your health care spending. A great resource for researching lower-priced pharmaceuticals is, where you can compare drug prices and find the best deals near you.

Refining your health care strategy

It's never too early (or too late) to review your personal health care plan. There are many ways to create a cost-effective strategy, and, given the ever-changing health care landscape, it's wise to be aware of what you can do to reduce your risk and protect your savings.

Robert Donaldson is a financial advisor located at Advisory Group West. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at (818-241-9061) or at (

©2013 Commonwealth Financial Network®



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Robert Donaldson (CA Insurance License #0541081) is a Registered Representative and Investment Adviser Representative with/and offering securities and advisory services through Commonwealth Financial Network, Member FINRA / SIPC, a Registered Investment Adviser. Additional advisory services offered by Advisory Group West, a registered investment adviser, are separate and unrelated to Commonwealth.

This communication is strictly intended for individuals residing in the states of AZ, CA, FL, HI, LA, NY, TX, UT, WA.