I’m 56 years old, recently divorced and only have $30K left in retirement savings — how do I rebuild my finances in time to enjoy my golden years?

Gray divorce

Each year, almost 675,000 Americans get divorced. But “gray divorce,” which refers to divorce among the 50-plus demographic, has doubled since 1990, according to a study from the Journals of Gerontology.

Gray divorce comes with economic consequences: Women experienced a 45% decline in their standard of living while men’s dropped by 21%, with both experiencing roughly a 50% drop in wealth.

Yet, it’s easy — and commonplace — to overspend after a divorce, principally because you’re now living on a single income and no longer sharing the cost of living expenses. But spending can also stem from emotional or psychological issues. Maybe you decide to splurge on a new wardrobe or luxury vacation after the divorce. Or, if you have kids, maybe you buy them gifts out of guilt.

But if you’re only a decade away from retiring, this is the time to buckle down and rein in your spending.

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How to build a stable nest egg in 10 years

Create a post-divorce budget. Start with your salary and any other sources of income. For example, will you be receiving spousal support or alimony payments? From there, subtract your expenses (including mortgage/rent, car payments, bills, food and medical care). Whatever is left over can be used to create an emergency fund, pay off high-interest debts and, crucially, go toward retirement savings.

Consider your living situation. If you’re selling the marital home, you could take the opportunity to downsize to a smaller home or move to a less expensive area. If you’re planning to stay, you may have to buy out your ex, which is another expense. But you could consider getting a tenant to bring in some extra cash. Ideally, you’ll want to pay off the mortgage before you retire.

Build an emergency fund and pay off debt. If you don’t already have one, you’ll want to build an emergency fund. That way, if an emergency arises, you won’t have to dip into your retirement savings and pay a hefty penalty. For example, if you make withdrawals from your 401(k) before age 59 and a half, you’ll pay a 10% early-withdrawal penalty. After that, you can start paying off any high-interest debt, such as credit cards — perhaps with money you receive as part of your divorce settlement.

Start saving for retirement. From there, you can start building up your retirement savings. If you’re getting alimony, consider putting this money directly into a retirement account. If you aren’t taking advantage of an employer-sponsored 401(k), now is the time to do so. Max out your contributions, and have them automatically deducted from your paycheck so you don’t have to think about it.

Look to the future. Saving can be hard, but having a goal in mind can help. What life do you see for yourself in retirement? Do you see yourself in a different state or even a different country? Do you want to volunteer, travel or pursue a passion? To make those goals a reality, you’ll need a retirement plan.

Designing a post-divorce retirement budget

Estimate how much you’ll need each month to live comfortably in retirement. While you’ll start receiving Medicare at 65, it doesn’t cover everything, so you’ll want to make sure you have enough set aside to cover additional medical expenses in retirement.

Then consider your sources of income: Social Security, a pension, any retirement savings or investments, as well as other sources of income, like an annuity. Depending on your circumstances, you may also be entitled to a portion of your ex’s pension or 401(k).

You can take your Social Security benefit as early as age 62, but you’ll receive a permanently reduced benefit. If you wait until your full retirement age (typically between 66 and 67), you’ll receive your full benefit. And if you wait longer, up until 70, you’ll get a bump.

Once you have a number in mind, you can figure out how much you’ll need to save — and how much longer you’ll need to work — to meet that goal.