September 25, 2018
Among the many issues a woman faces when divorcing, are some financial surprises that she should be aware of. In an online survey conducted by the marketplace Worthy , 46% of divorced women said that they encountered financial surprises when going through the divorce process. The survey reached over 1700 adult women from around the United States. In an effort to better understand the financial challenges that women face in their divorce journey, the survey asked for the ages of the participants and where they were in the divorce process. The results were based on the Wealth Warriors survey, conducted in April 2018, and was written in collaboration with Laurie Itkin, CDFA, and the ADFP.
The participants were divided into three age groups: 18-34 years old, 35-54 years old and 55+ years old and three stages of divorce: divorce on the horizon, in the midst of divorce and post divorce.
According to Laurie Itkin, a certified divorce financial analyst (CDFA) and member of the Association of Divorce Financial Planners (ADFP), the six nasty surprises divorcing and divorced women often encounter during their divorce proceedings are:
- Being unaware of the total size of their marital debt including the primary mortgage, home equity line of credit, auto financing, credit card debt, 401(k) loans and student loans
- Not anticipating they would have to return to the workforce
- Assuming child support and/or alimony would be higher or last longer
- Assuming they could keep the marital home
- The staggering cost of health care insurance
- Underestimating the cost of getting a divorce
The role a woman takes in her marital finances when married, can determine the number of financial surprises during her divorce journey. If she hasn’t been involved in the bill paying process while married, she will not likely have a true sense of the marital debt or the cost to live in the manner to which she is accustomed. She may not be aware of any savings or retirement funds that have been set up. Trying to make sense of it all, can be emotionally and mentally exhausting.
When the divorce is final, and many times before, the woman becomes responsible for paying her own everyday bills, paying down any outstanding debts, investing in her future, etc. If she has not been part of the workforce recently or is making less money than needed at her current job, she must now seek employment that meets the demands of her current lifestyle. In order to obtain that new position, she may need to bring herself to a higher level of education. This is her time to reinvent herself.
Alimony and child support will help her get through this tough time but it is not always as much as expected and does not last forever.
If a woman is not able to stay in her home after a divorce, in addition to everything else, she must also find a new home and furnishings to meet her new lifestyle and budget.
Oftentimes divorce leaves one or more family members needing health insurance coverage. If new employment does not offer that right away, research is needed to find the best coverage at the best price.
In order to assure that everything is considered when divorcing and a settlement is fair for all parties, it usually means hiring a lawyer is necessary. This is an added expense for both parties.
Across all age groups, the majority of women surveyed said their biggest financial fear regarding divorce was living on one income and the second was the cost of divorce.
These financial fears of divorce are real and can be physically and emotionally difficult, but while working through them, women start to reinvent themselves. They become fearless, self sufficient and empowering. The survey shows that many of these women are striving for and obtaining their own financial independence and are becoming financially proactive in planning for their future.
This article is provided as a general overview and is not intended to be legal nor tax advice. Please consult your legal and tax professional for all such advice.
Looking for additional information? Attend our next divorce workshop October 13th in Scottsdale, Arizona. Click here to learn more and register.