Divorce can bring significant changes to both spouses’ financial situations as they begin the next chapter of their lives as newly-single people. However, as an accredited asset management specialist with Edward Jones points out, women are usually more financially disadvantaged by a divorce than their husbands.
Men who are paying spousal and/or child support may find this hard to believe, but U.S. Census Bureau statistics show that the average household income of women drops by over a third following a divorce. Part of this because women still on average earn 77 cents to each dollar earned by their male counterparts.
It’s important for a divorcing or newly-divorced woman to meet with a financial advisor to go over her specific situation and create a plan for the future for herself and her children. However, there are a few things that every woman should do to help ensure financial stability.
On average, women have only about 60 percent as much as men in retirement plans. That’s why it’s essential to contribute as much as possible to employer-sponsored retirement plans or retirement accounts. Commit to having a set amount taken out of your paycheck each pay period. If your employer matches a specific percentage, try to set aside at least that much.
If your investment portfolio has been divided up in the divorce settlement, take a careful look at it. You may want to rebalance your asset mix to make sure that it is appropriate for you based on things like estimated years until retirement and risk tolerance.
Make sure that you have an emergency fund. This should be enough to cover six months’ worth of living expenses, if possible. It should be in an accessible account rather than one that carries penalties for withdrawals. Remember that you may not be able to count on your ex-spouse if you are hit with unexpected circumstances like a job loss, home repairs or medical bills.
Much of this good advice for all people, regardless of gender or marital status. However, for people whose financial assets have been tied in with their spouse’s, it is essential to re-evaluate your situation when these assets are no longer conjoined — particularly if you are earning less than your spouse. Your Louisiana family law attorney can likely recommend a financial advisor who can help you get or stay on the right track to a secure, comfortable lifestyle following your divorce.
Source: The Shreveport Times, “Financial tips for newly single women” Wil Adams, AAMS, Oct. 14, 2014