Attention! Considering going through a divorce? Then run, don’t walk, to your nearest qualified financial planner on the way to your divorce lawyer’s office. That’s my read on an article published earlier this month in Financial Advisor magazine .
The article noted a recent study by the National Center for Family and Marriage Research at Bowling Green State University indicating that the rate of divorce among women over 50 continues to grow. Divorce rates for the over-50 set have doubled over the past 20 years to one in four couples.
This graying of divorce brings up all sorts of issues about personal finances and retirement and means that financial advice for women facing divorce is urgently needed.
Aside from the emotional harm, divorce can be as financially devastating as a sudden death of a spouse. And for those who are older with retirement upon them it can be even more of a problem.
While household finances may have been handled by the wife in a marriage, more often than not she has not been privy to everything and may not even be aware of certain issues related to investing, retirement benefits and Social Security. Too often issues of investing, mortgages and broader financial planning are deferred to the husband leaving a wife ill-prepared to pick up the pieces if she is on her own.
This is why I urge families to share information and goals and be involved in the money conversations throughout a marriage so that each party is better prepared in case there is a life-altering event – whether a death, disability or divorce.
Don’t expect the divorce process to be fair. And don’t think that you’ll end up maintaining the same lifestyle you once had as part of a married couple. The reality is that the resources of one household now need to support two. And the costs of maintaining two distinct households goes up while the income sources stay the same or go down.
Big house, new cars, vacations and private school for the kids before divorce? Whether you had one or two paychecks to support that life before the divorce, you’re not likely to maintain the same after when those paychecks now need to stretch to cover two households. So let’s be realistic: The math won’t work.
“Some women feel they are guaranteed a lifestyle similar to what they have been living in marriage,” says Laura Pilz, vice president and financial advisor at Merrill Lynch Wealth Management. “In reality, they are guaranteed only a lifestyle similar to what the husband ends up with.”
Establishing credit, maintaining a home, understanding the tax consequences of divorce, navigating retirement choices including Social Security benefits are all part of what a divorcing couple need to understand preferably before the split is final.
And since these couples are older, there is less wiggle room for error and less time to shore up retirement finances. So it is all the more important to be dealing with finances with the help of a qualified divorce financial planning expert before a final settlement is reached.
Too often, a women has not been engaged in the financial matters before the divorce and has no direct links to advisors who may be able to help her. In my experience at Merrill Lynch when a couple indicated that they were going through a divorce, the policy was to simply not do anything with the couple’s investments and minimize contact with the couple out of “an abundance of caution” to not get sued.
This is exactly the time that advice is needed but the family’s “financial advisor” is not going to be a part of the conversation or offer help. But there is a glimmer of hope. For those who are in need of help and want to get a handle on their personal finances before entering the court house, there are specially trained financial planners who know about divorce and are trained to handle issues such as taxes, credit, retirement and Social Security.
And whether or not you continue to use your family’s “financial advisor” you can get independent and objective advice from a divorce financial planning expert who can work collaboratively with your lawyer, accountant and other advisers. Start by checking out those who hold a CFP® designation at www.letsmakeaplan.org.