By Mary Ballin, CFP
Learn more about Mary on NerdWallet’s Ask an Advisor
Divorce is usually traumatic for everyone involved — well, except the divorce attorneys — but ample research shows that in many ways it’s harder on women.
Women who divorced at least once in their life were 24% more likely to have a heart attack than women who stayed married, according to a 2015 study by Duke University researchers, and divorcing more than once pushed the risk to 77%. Even after remarriage, women’s risks remained higher. Conversely, men’s risks increased only after two divorces, and remarrying wiped away the higher heart attack potential.
Within a year of divorcing, more women than men live in poverty and receive public assistance. They earn less money and are less likely to be able to afford to live independently, according to 2009 U.S. Census Bureau data. Divorce can hurt not just a woman’s income but her credit standing and retirement savings as well.
It’s important that women understand how these issues are likely to affect them, so they can prepare themselves as they transition into the next chapter of their lives.
Learn how social and gender roles contribute
Many factors contribute to the disproportionate financial impact of divorce. For example, while a woman may have continued to work after marriage and motherhood, it’s still likely she earns less than her spouse. When she must survive only on her own income, she may struggle.
Post-divorce, she will be responsible for a variety of expenses that had been shared, including housing, utilities, food, child care, insurance and health care.
Many women, especially those who grew up when gender roles were more rigid, married into partnerships in which men handled the finances, which can lead to serious gaps in knowledge post-divorce. Whether a woman stayed at home or was in the workforce, she may be unaware of what it will really cost her to live month to month on her own. She may be unaware of the family’s total assets and which ones have the greatest value for her. Or she may have unrealistic expectations about what she can hope to receive in a divorce settlement.
Additionally, retirement accounts may be primarily in her spouse’s name; even if she receives part of those monies in a divorce settlement, she likely will still need to save more money toward retirement. If credit cards, titles and loans were issued in the ex-husband’s name, as opposed to jointly, women may find their personal credit score is lower than that of their ex — or at least lower than they had expected.
All these factors, along with the emotional toll, can mean it takes a woman longer to recover financially from a divorce. It is possible, however, to take steps to speed your recovery.
Put your financial house in order
First, it’s essential to work with a good divorce attorney, preferably one who understands the value of having a certified financial planner on your team. We are seeing more divorce lawyers encouraging their clients to work with a CFP. A CFP can help you understand the assets at stake, which ones might be most valuable to you in the future, how the divorce will affect your personal finances and what steps you can take to regain a solid financial footing as quickly as possible.
Once the divorce is over, here are some key points to consider:
• Estate planning: If you have sole custody of minor children or share custody with your ex, estate planning is important. At the minimum, you need a will and a plan detailing who will care for your children — and how — should something happen to you.
• Insurance: If your health insurance was through your spouse’s employer, you will now have to secure your own. You may want to continue health benefits through COBRA, or if you’re employed, you may choose employer-sponsored health benefits. If neither of those is a viable solution, you can use the government Health Insurance Marketplace to find coverage.
• Life and disability insurance: You also need to think about both of these insurances and decide whether they are appropriate for your personal financial situation. If you have dependents who rely on you for financial support, you’ll want to consider having both types of insurance — life insurance in case you die prematurely and disability insurance should you become unable to earn an income. Both may be available through an employee’s benefit package. Start researching your life insurance options now.
• Long-term care: Long-term care insurance can help ensure you have money available to pay for residential or facility care should you have a long-term care need and can no longer take care of yourself.
• Taxes: How will you file your taxes now? Single? Head of household? Who gets to claim the children as dependents? How are child support and spousal support taxed? Getting professional tax advice is a good idea, even if you think your taxes will be simple.
It’s important to take care of yourself no matter what your position in life, but after a divorce, you have to be a little bit selfish — your priority needs to be securing your own financial well-being. No one likes to think it could happen to her, but if divorce is unavoidable, it’s important to take steps to ensure a good financial life afterward.
Image via iStock.