What Women Need to Know About Financial Planning and Divorce

We don’t plan a marriage thinking about divorce. But if divorce is on the horizon, it’s important to make financial planning a priority, especially if your partner earns more income than you.

Adjusting to a one-income household can be a difficult transition while also dealing with the emotional aspects of divorce.

If you’re a woman going through a divorce, consider these four tips to keep your finances on track during this tumultuous time.

Make a New Budget 

Men outearn women in 55% of heterosexual relationships. Women are also still the primary caregiver of the children in most marriages. But even if you both contributed equally to your financial situation and child-rearing duties, your financial situation is going to look different after the divorce regardless of who did what during the marriage.

That’s why it is fundamental to create a new financial plan that takes into account your priorities and budgetary concerns. If you receive the primary home in a divorce, while also getting full or partial custody of the children, you need to create a budget that takes into consideration the ongoing costs related to child-rearing and house maintenance, for example. 

Create a New Financial Plan

Your previous wealth strategy took into account a different future and different financial outlook. During a divorce you need a new wealth creation and management strategy. This can be challenging, but you do not need to take this on alone. Financial advisors have plenty of experience creating new wealth management plans post-divorce that take into consideration the differing financial needs of women, who are likely going to live longer and therefore have more retirement years to adjust for. We can recommend new strategies that will help you maintain your lifestyle well into retirement.  

A Potential Blind Spot

One asset often overlooked in divorce financial negotiations is employer compensation in the form of stock options and restricted stock. If your spouse has received this type of compensation, you need to have a financial planner analyze the situation. Even if these assets don’t have a current value, they may prove to be quite lucrative given their long-term nature. Ignoring your spouse’s employee stock compensation could cost you a substantial sum of money. Your spouse earned this compensation during your marriage. You should be able to enjoy the fruits of this labor.

Do Not Forget About Retirement Assets

When you are in the thick of negotiating a divorce with your spouse, there may be a ton of contentious issues to work through. Questions surrounding child support, custody, and alimony payments may be at the top of the list, but do not forget to discuss a fair division of your retirement assets. Also, keep in mind that what is fair may not be a 50-50 division of the assets. 

This is because women live longer than men and have more catching up to do with their retirement investments than men do. Women make less than their male counterparts and spend fewer years in the workforce because of child-rearing responsibilities. All of these factors combined put women––especially divorced women––in a disadvantaged situation when it comes to retirement planning. 

Getting a Divorce?

Roughly 40% to 50% of marriages end in divorce. At RJL Financial Group, we understand how to create financial plans for single women. We can help mitigate the stress that transition may cause by listening and working with you on a financial plan that gives you confidence and comfort. To learn more, schedule a complimentary consultation by contacting us at (201) 612-6626 or info@rjlusa.net.

About Jerry

Jerry Clark is the Founder and Principal at RJL Financial Group, an independent financial advisory firm dedicated to supporting and empowering their clients so they can enjoy life without financial worry. With more than 20 years of experience, Jerry specializes in guiding his clients through transitions, whether that be retirement, divorce, or widowhood. His tailored services and strategies help set clients up for the retirement they dream of, overcoming challenges and taking advantage of opportunities along the way. Jerry is a former golf pro who would play every day if he could! Inspired by his sports coaching background, he aims to motivate and empower pre-retirees and retirees to achieve predictable savings results, giving them the ability to feel secure about their future. Jerry is known for going the extra mile for his clients and building relationships that make his clients feel like family. 

When he’s not working (or playing golf), Jerry loves spending time with his wife, Lisa (whom he’s known for 40 years!), and their two grown daughters, Riley and Josie. You can often find him working or relaxing at his beach house in South Bethany, Delaware. To learn more about Jerry, connect with him on LinkedIn.