Divorce can significantly impact a woman financially, especially if she hasn’t been actively involved in investing or other big-picture financial decisions during her marriage. However, the right approach, team, and advice, tailored to a woman’s specific needs, can be empowering, save valuable time and money, and reduce unnecessary stress.

A study conducted by the Center for Retirement Research at Boston College, showed that those who have gone through a divorce are more prone to have insufficient resources to maintain their desired standard of living upon reaching the age of 65. And for women it is even harder. A study published by the U.S. Government Accountability Office showed that women’s household income decreases by 41% after divorce, while men’s income only falls by 23%. Despite progress, husbands still earn 69% more than wives. Many women defer financial planning to their spouse, making them financially worse off. Rebuilding long-term income potential after taking a break from the workforce is challenging.1

When a source of income stops and assets are divided, even the best financial plan can be disrupted, turning a family’s finances upside down.

It’s essential while navigating this transition, to have a gameplan to get organized, track down key documents, update information, and create an inventory of accounts and financial interests.

Here’s how to start managing the transition in 5 steps:

1. Choose Your Team

It may be prudent to consult multiple professionals, such as an estate attorney, a tax specialist, and a financial advisor. Accurate guidance is crucial during the initial phases of this transition to your new life. As Michele Lerner reminds us in her article for Forbes Wealth: “A common mistake is to delay financial planning until after a divorce. You want to understand what you’re up against financially before you agree to anything.”2

If you don’t have a financial advisor, it’s crucial to find one who understands your situation, and puts your needs first. Start by looking at two or three recommendations from other professionals (such as your attorney) and from friends who are happy with their own financial advisors. Arrange a meeting to assess which financial advisor possesses the expertise to help you understand the short and long-term impacts of the complex decisions you will be facing, has the temperament to advocate on your behalf and to provide compassionate guidance, and uses processes that best align with your preferences as you begin this journey.
1 United States Government Accountability Office, “The Nation’s Retirement System,” 2017.
2 Michele Lerner, a Washington, D.C.-based freelance writer, has been covering personal finance and real estate for more than 25 years. Her work has appeared in numerous publications including The Washington Post, Bankrate.com, The Motley Fool, REIT magazine, Fox Business News, National Real Estate Investor magazine, DailyFinance.com and NewHomeSource.com.

2. Create a Checklist

After forming a tailored group of financial and other experts for your unique needs, preferably independent from those of your soon-to-be ex-spouse, establish a structured plan that will offer a clear road map moving forward to a fair and just settlement.

The process begins by collecting crucial data for a comprehensive analysis by your team, such as Social Security numbers, income, expenses, assets, obligations, employee benefits, insurance policies, and credit reports.

3. Get Organized

To organize your finances, gather key documents like brokerage and bank statements, insurance policies, tax returns, loan documents, and Social Security statements. Update your information – including beneficiaries – and start taking steps to protect your assets and heirs. Finally, create an inventory of your accounts and interests, and be sure to also look at life insurance and long-term care policies.

4. Start with your Primary Residence

The primary residence is typically the first consideration in the process of dividing assets, and there are a number of financial aspects that should be looked at carefully before making the decision to keep the home or sell it.

It might be necessary to segregate the credit of each spouse and transfer the title and mortgage into the name of one owner, as certain couples opt to sell their residence prior to the completion of their divorce proceedings because of the tax implications.

5. Create a Road Map

Understand your goals and create a road map with your financial advisor to achieve them. By following these five steps, you can begin to make progress toward your new financial life, with ongoing support.

Our Nichols Wealth Partners and Destiny Family Office team guides, assists and empowers clients – including those who have high-net-worth and complex situations – gain the knowledge they need to simplify complex financial information and make better-informed decisions.

Our Nichols Wealth Partners Scorecard can help you evaluate and “score” where you are financially across ten important criteria you’ll want to consider as you begin this new phase of your life. You can gain clarity on where you are and where you’d ideally like to be in areas such as preserving wealth, mitigating taxes, and protecting yours and your family’s financial future in retirement and beyond. Complete the complimentary Scorecard, now and we can discuss it with you once it’s completed. We believe the insights you will discover will be profound.

Taiana Daniel is the Director of Business Development with Nichols Wealth Partners, a Destiny Wealth Partners firm.

Sources:

Burnham, C. (2018, July 13). States Should Re-Evaluate Their Assumed Rates Of Return. Forbes. https://www.forbes.com/sites/christopherburnham/2018/07/12/states-should-re-evaluate-their-assumed-rates-of-return/

Contributor, R. W. (2015, December 16). Top Financial Concerns In A Divorce — And How To Plan For Them. Forbes. https://www.forbes.com/sites/rbcwealthmanagement/2015/12/16/top-financial-concerns-in-a-divorce-and-how-to-plan-for-them/

Many Public Sector Workers Lack<br>Adequate Retirement Income, Study Says. (2011, October 19). https://news.bloomberglaw.com/daily-labor-report/many-public-sector-workers-lack-adequate-retirement-income-study-says

Munnell, A. H. (n.d.). Do Women Still Spend Most of Their Lives Married? – Center for Retirement Research. https://live-crr1.pantheonsite.io/do-women-still-spend-most-of-their-lives-married/

Peralta. (2020, October 23). Taking Control of Your Finances after Losing a Spouse: A Guide for Women – Life Après. Life Après. https://lifeapres.com/taking-control-finances-losing-spouse-guide-women/

Taking Control of Your Finances after Divorce or Death of a Spouse: A Guide for Women | Morgan Stanley. (n.d.). Morgan Stanley. http://www.morganstanley.com/articles/women-financial-transition
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