Going through a divorce is difficult for anyone, regardless of gender. However, in general, I do think women are often hit harder financially by a divorce. I’ve seen this myself working with clients at SUM180; and of course I’ve seen the Marie Claire report that women’s quality of life drops 45% after divorce. It is a sobering number, but it aligns with the findings of the Social Security Administration:
20 percent of divorced women aged 65 or older live in poverty, compared with 18 percent of never-married women and 15 percent of widowed women. Differences in poverty rates are even larger at the oldest ages — 22 percent of divorced women aged 80 or older are poor, compared with only 17 percent of never-married women and 15 percent of widowed women.
I believe there are several reasons why women are hit so hard financially by divorce:
- Women may not be as effective in protecting their property rights during the divorce settlement. Anxious for “closure,” women may concede too much during negotiations. Unfortunately, being unable or unwilling to fight for one’s property rights can spell the difference between an anxious financial future and a secure, comfortable one.
- The gender pay gap. Even a woman who worked full time during her marriage may have earned less than her spouse for similar work. When she was part of a couple, the impact of the gender pay gap was minimized, but now, as a single woman, she must bear the discrepancy alone.
- Time off to bear and raise children. Many women transition to part-time work or step back from their career altogether to raise their children. Then, if they return to the workforce after an extended absence – say, post-divorce – they face multiple challenges. Their job skills need to be updated, or worse – they need to train for a new job entirely. Professional networks need to be rebuilt. And, if they did not earn an income during their homemaker years, they may find they have no credit, either.
If you are a woman going through a divorce, what can you do during and after to profect yourself financially? Here are a few steps that will help you avoid costly mistakes and ease your financial recovery:
- Reach out to a trusted adviser for support through the divorce process. A woman in the midst of divorce needs to make careful decisions – her long-term-financial health depends on it – but chances are, her emotions are all over the map and will not serve her well. This is a good time to reach out to a trusted friend for advice. A friend or family member with her best interests at heart can lend her the clarity and energy for the next steps she needs to tackle, and guide her toward decisions that honor her priorities and long-term goals. A friend who has been through a divorce herself may even recommend a great divorce attorney or divorce financial planner.
- Get up to speed on your financial picture right away. As soon as the decision to divorce is made, a woman should get access to all bank and investment account passwords and documents, and recent tax returns. She should also check all credit reports for discrepancies. After she gathers all the financial statements, a financial planner can help her organize and interpret this critical data.
- Set financial goals – then create a realistic, doable financial plan to achieve them. As a divorced woman embarks on her new single life, it’s an opportunity to take a fresh look at her financial goals, to assess what it would take to reach those goals under her new circumstances, and develop a concrete plan to move forward. A good financial planner will work with her to build the plan to achieve her goals.
Have you gone through a divorce? What insights can you share about managing and recovering financially?