Follow this five-point checklist to determine your financial fitness…
1. Have your own retirement savings.
Preserve your retirement fund benefits if you leave your employer. Whether your change in employment is due to a step up the career ladder or the decision to be a home executive, make sure that your retirement benefits are preserved.
Don't be tempted to use your retirement fund to float your household income so that you can afford to stay home. Put a savings plan in place when you start to plan your family to enable you to make decisions without compromising your retirement. Your financial adviser will be able to guide you through the process and give you the best advice on the tax implications and the best savings vehicle for your situation.
Stay at home moms also need retirement plans.
2. Do not ignore disability cover and critical illness cover.
- Critical illness cover: This cover is invaluable in assisting you with the financial impact that a critical illness could have on your lifestyle. It could be used to assist your recovery with additional care and support, which could all come at a price such as childcare and/or home nursing.
- Disability cover: This will assist in paying for any adaptations you may need to make to accommodate your disability. It can also be used to supplement your income or to pay for additional help.
- Income protection: If you rely on your salary, income protection will replace your income.
Make a sacrifice now, and pay yourself first, to ensure that your retirement is secure and that you need not rely on your husband's retirement provision — chances are it will be insufficient to support both of you when he retires.
3. Have your own bank account.
In the event of your spouse passing away his account will be frozen and you will not be able to access the funds until an executor is appointed and they agree to release funds as they deem appropriate. This could take a while.
Make sure that you have sufficient funds to cover three to six months' living expenses in a bank account in your name.
4. Know your legal status.
Make sure that you are comfortable with the legal status of your marriage. Understand your ante nuptial contract and what rights and obligations it affords you.
If you are married in community of property; do you know that you and your spouse are jointly and severally liable for any debts incurred, as well as the fact that you own all assets together?
If you are not married and have a so-called "common law" spouse, do you know where you stand financially if you separate?
5. Understand the impact of divorce on your financial plan.
Your retirement funds: Your retirement funds are regarded as an asset which will be taken into account when reaching a settlement with your soon-to-be ex. Depending on your marital regime this could mean that you are entitled to a portion of your ex-husband's retirement fund.
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