A Note from Marguerita: No one wants to go through a divorce, that we know for sure. But sometimes it is simply the best solution to moving forward toward a more healthy, financially successful life. The good news is the statistic that 50 percent of marriages end in divorce, a reality that began in 1980s, has been steadily dropping. Today, researchers estimate that approximately 42-45% of marriages in the United States end in divorce (excluding legal separations).
- 42-45% percent of first marriages end in divorce.
- 60% of second marriages end in divorce.
- 73% of third marriages end in divorce.
No matter how you cut it, if you are going through a divorce it’s important to know that the financial needs of a divorced woman are different than those of a married one.
Here’s what I suggest:
- Pre-divorce financial counseling can help you understand the financial impact of a particular property settlement decision.
- Do your best to gather these documents: Investment account statements showing account values, holdings, cost basis and account titles, debt statements showing interest rates and outstanding balances, property deeds, insurance policies, including the declarations pages for life, health, disability and long-term care insurance, property and casualty coverage, including auto, homeowner, renter, umbrella and business insurance, tax returns from the last three years, and prenuptial or post-nuptial agreements.
- Take a breath. Although it’s good to have a solid grasp on your accounting today, the key is to help you plan ahead for your financial future. I will help you think though short-term plans (a budget, how much you can invest in a house) with an eye on your long-term goals (retirement accounts, etc.).
The bottom line: Whoever you choose to support you as you go through the journey of divorce, know thatwomen who enlist the support of a qualified financial advisor have a long-term financial advantage over those who don’t. I’m here to help! Click here to send me an email.
For more information: Scroll down to view three articles I wrote for Forbes magazine about the topic of divorce.
That’s not all: I am thrilled to have my advice be featured in the upcoming cook, “Why Divorce: 5 Reasons to Leave,” by my PR colleague and friend Hope Katz Gibbs. Click here to learn more: www.WhyDivorce.us
Forbes: Financial stability is a top concern among women who divorce. Yet a new study finds that over 95% of women do not use a financial advisor when going through a divorce despite having financial goals they want to achieve. In my position on the board of directors of the Association of Divorce Financial Planners, I see firsthand the financial consequences a divorce can bring. With the effects lasting years – even decades – why are women not seeking financial advice from an expert?
The biggest problem is a lack of awareness. Most women don’t know how a financial advisor can benefit them early on in the divorce process. Only 5% of women in a recent survey knew about using a financial advisor as part of their divorce team.
However, among the financial revelations from divorced women, a new study reveals that 61% of women said that they wish they would have known to use one. They believe that working with a Certified Divorce Financial Analyst (CDFA) would have been valuable and important to them and their attorneys.
A financial advisor can help you think through your lifestyle to gain a better understanding of your expenses both before and after a divorce. This is especially important for women who haven’t been involved in paying the bills, managing investments, buying insurance, or budgeting.
Financial advisors can also help you uncover critical financial assets that might not be on your radar. These hidden gems are crucial for making sure you get your fair share in a divorce. A few big-ticket items you may not have thought about include the following:
- The marital home
- Engagement and wedding rings
- Fine jewelry
- Heirlooms and antiques
- Bank and retirement accounts
- College savings accounts
Hidden Gems to Watch Out For
The marital home is an important consideration. Not only is there often valuable equity in a house, but you and your children, if you have any, will need a place to live after the divorce. Women with children are more likely to want to stay in the home but doing so might not be possible for financial reasons. If you can’t qualify to refinance the mortgage in your name or can’t afford to buy out your spouse’s share of the equity, there may be no choice but to sell it. Online valuation tools such as Zillow and Realtor.com can give you an idea of what your home might be worth, but you should work with a professional real estate appraiser before making any decisions.
In most states, an engagement ring is not considered a marital asset because it is a gift that is received before the marriage. This means that women will keep their rings as separate property, even in divorce. An engagement ring is often very valuable (think of Mariah Carey’s $7 million ring) but is usually put aside post-divorce, unused, unworn, and forgotten. When it comes to an engagement ring, women don’t often consider it to be a financial asset, but it can hold high value, considering the average cost of an engagement ring in the United States is $5,900, with wedding bands averaging $1,100 for women and $510 for men. If you want to sell your rings, Worthy is a site dedicated to helping women sell jewelry. Even if you sell your rings for roughly half of their value, a $3,000, 20-year investment with a 7% annual return can grow to nearly $12,000.
Heirlooms and antiques that are passed down from generation to generation through family members can hold significant value but aren’t typically considered marital property. On the other hand, bank accounts, retirement savings, and college savings accounts can be substantial financial assets. During a marriage, one in five women admits to handing over control of money to their husbands, but they must play an active role in their finances after divorce. Many women struggle to maintain the same lifestyle they had during the marriage, and a financial advisor can help you see the future more clearly to guide you when separating monetary accounts and other assets.
Divorcing Women Have Financial Goals
When it comes to financial goals that women have for the future:
- 66% hope to pay off debt
- 41% want to save for a comfortable retirement
- 38% would like to have an emergency fund
- 27% aspire to purchase a new home
- 20% are striving to create new streams of income
- 19% are hoping to build their wealth through investments
While it’s clear women who divorce have financial goals, many don’t have a clear path on how to achieve them. Financial advisors can play a significant role when dividing marital assets during the divorce process. A CDFA®professional can put you in the best position possible to help you achieve your financial goals post-divorce.
With women living longer, having a financial advisor by their side during divorce is crucial for long-term financial planning. However, according to the Worthy survey 72% of women who are divorced did not consider saving for retirement a top priority. This makes working with a financial advisor even more crucial when facing a divorce. A financial professional can help you overcome emotional turmoil to bring you the financial stability you deserve after divorce.
Forbes: Grey divorce is a new demographic trend, and it is rather concerning that this trend has accelerated in the 21st century. In the 1990s, only 1 in 10 people over age 50 were divorced. Currently, 1 in 4 people are going through grey divorces, and the rates may double in the near future.
Divorcing in a later stage in life is particularly challenging for couples. The experience is emotionally and financially traumatic and includes a long list of psychological side effects that lead to “burnout”. When the couple first expresses their dissatisfaction with each other and announces their intention to file for a divorce, the process might not seem problematic. However, once the divorce is finalized, the phase of self-realization presents difficulties, as the individuals face life after years of sharing love, memories, pain, laughter, tears, and experience in a long marriage with children and perhaps grandchildren.
Challenges for Couples Divorcing over the Age of 50
- Retirement Benefits and Social Security
While it is customary in divorce cases to split the wealth, the question of distributing Social Security benefits presents a different challenge. Social Security is a federal program in which the U.S. government provides financial assistance to retired people through money collected from payroll taxes. When couples divorce at or above the age when they become eligible to collect Social Security (currently 62), their records must be examined to calculate the amount each individual is eligible to receive. For one, a partner’s hard-earned pension is considered a joint asset for both partners and is therefore subject to division following divorce. This means that when the money is released, it is divided into equal amounts of funds deposited in both partner’s bank accounts. The same thing is done with retirement benefit funds. Generally, the rule of thumb is that the money accumulated over the period of time the couple were married is split equally.
This serves as a major challenge to the partner who has worked hard his or her whole life to ensure that life after retirement goes smoothly, but their benefits may be diminished if their partner did not earn as much as they did. Sometimes, the money is not sufficient to cover the bills of the two households as the separated couple begins their lives away from each other. The person is limited to what the partner earned while they were married. This means that whatever the person accumulated before marriage is untouched, but this amount might not be adequate compared to what is split between the partners.
- Division of Assets
As mentioned earlier, the division of assets is a must when it comes to divorce. It is a real challenge, considering that the work a person has done over the years while in active marriage is split down the middle. The spouse’s contribution is not considered in this case. It can be extremely frustrating, but the law is the law.
It is quite clear that the property earned before marriage is usually untouched. However, one primary challenge comes from the need to identify marital and premarital property. It is much more difficult to determine these factors in grey divorce cases because of the length of the marriages.
The clear-cut determination of the value and amount of each person’s property is eroded by developments that occurred over the years during a long marriage. When it comes to the division of these properties, conflicts arise as each person tries to claim what exactly belongs to him or her. It is a significant challenge that can be fought over in court for extended periods of time.
The division of assets is ultimately determined by a judge and as much as the divorce lawyers will try to dictate what is “fair” from the perspective of each party, the judge ultimately has the final say.
- Health Insurance
Health insurance affects the spouse who is not employed and has health insurance benefits provided by his or her partner. After the divorce has been finalized and both partners have gone their separate ways, health insurance for the partner who is not employed is immediately terminated. Not having insurance coverage during old age, when health often begins to deteriorate and health care costs increase, can present a major challenge for the uninsured. Another consideration is a life insurance policy, in which an individual can remove their partner as a beneficiary of his or her policy ahead of the potential divorce action. Again, this is a massive blow to the other partner. There is no formulated legal framework that can be used to prevent this kind of action unless the divorce process has already begun.
In addition, the individual holding the life insurance policy can still remove the ex-partner from the list of beneficiaries at will after the divorce has been finalized. This means that the partner cannot make a claim regarding the matter and is totally dependent on the kindness and goodwill of the former spouse.
- Challenges for Adult Children
Most of the participants in a grey divorce have adult children who are living their own lives and are busy with their careers. The divorce between their elderly parents wreaks havoc for these adult children, who often put their personal lives on hold to handle the situations at home.
Most of the time, the children are unsuccessful in saving their parent’s marriage. It is a delicate situation because in some cases, the children might be forced to take sides and oppose one parent. This typically occurs when parents share embarrassing or uncomfortable details of their marriage.
After a divorce, the parents might lean on the adult children for emotional, and sometimes financial, support. This can be overwhelming for the children, who might be trying to find their way in life and establish their careers.
Grey divorcees, or silver splitters, face many challenges: Finances, health insurance, adult children, and division of assets are some of the problems that hinder diamond divorcees. They need financially neutral advisers to help them plan their post-divorce finances. A financial neutral can help couples determine and negotiate how they will divide savings and investments equitably.
Forbes: Grey divorce refers to a demographic trend that has witnessed an increase in the split or separation of older couples who have been married for a long time. Grey divorcees are also called “silver or diamond splitters,” and the term refers to the hair color that older people often have. The term began to be used in the United States in 2004, but the practice had already been prevalent for about 20 years. Research shows that the overall rate of divorce in the United States has declined over the past 20 years, but the divorce rate of people over 50 is on the rise.
Reasons for Grey Divorce
Divorce is one of the most challenging parts of anyone’s life, but sometimes it is inevitable. The social stigma surrounding divorce has gradually diminished over the years, but it hasn’t led to an overall increase in divorce except among people over 50. The question of why grey divorce has been increasing can be best answered by analyzing the aspects of life that affect long-term marriages.
Financial matters are the primary issues that arise during a grey divorce. Financescan be tricky to handle, especially when one spouse has challenges managing them. Couples who struggle with debt or constantly fight about finances often end up divorcing.
On the other hand, if one of the partners earns all of the money in the household and; therefore, makes all of the decisions involving money, problems may arise. Divorce can be also be caused by a partner’s overspending habits or mismanagement of funds. Research has shown that marriage grows stronger when the husband increases his earnings; conversely, the marriage more often fails if the wife’s earnings increase.
When you ask a couple why they have opted for divorce, you will usually hear answers such as “it was just not working out” or “we just grew apart.” Couples in grey divorce may have realized later in their lives that they lost the spark they had when they first married. Considering that the stigma around divorce is diminishing, they decide that divorce would be the best course of action.
Couples could choose to start the divorce proceedings after their children are grown and have left home, leaving behind what is known as “empty nest syndrome.” Most often, partners dedicate their lives to raising their kids, and once the kids have grown up and left, they are left wondering “What’s next?” They do not recognize the person they had married years ago, and divorce becomes an option.
Baby Boomers tend to be individualists, placing their needs and happiness ahead of that of others, and that can lead to infidelity in marriages. Infidelity is another major reason for grey divorce. Cheating does not carry the same stigma it did in earlier times, and this has led many married couples to stray. Many dating sites hook up married persons with temporary sexual partners, thereby encouraging infidelity. Older men may start finding younger women attractive. The same could apply to older women who are attracted to younger men who are better looking.
Better Health and Life Expectancy Rates
Life expectancy is much higher today than for generations prior to Baby Boomers. Life spans have drastically increased, and even at age 50 or above people think they have time to discover what makes them happy in marriage. Older people have stopped shying away from the idea of divorce after drifting away from their partners because they still believe they can find happiness.
Access to great health care and the availability of activities to keep an individual mentally, physically, and psychologically active have encouraged people to seek partners who suit their interests and attitudes when their marriage partner has failed to stay healthy, fit and active.
The first thing that often comes to mind when one hears about divorce is infidelity. However, there is more to divorce than one partner being unfaithful by having sexual or emotional relations with someone else—one could be unfaithful in many other ways. Addiction is an example of another form of unfaithfulness. An individual could be addicted to drugs, alcohol, gambling, or pornography, and these addictions might derail a marriage.
Many marriages fall apart when an individual puts their habit above the needs of their families. Dependencies, such as gambling place financial strains on the marriage and eventually lead to divorce. There are people who bet and lose all their assets and must start from scratch because they choose to gamble instead of providing for their future and family.
Implications of Grey Divorce
Grey divorce can still affect adult children, even though they often have grown and left home. The process of adapting to the change in family dynamics can be difficult. The children are accustomed to a single family unit, and they now have to deal with a split family. Children may be trapped between their parent’s feuds and may be forced to take sides, which is not very pleasant. Older children have problems adapting to their parent’s dating life or the new family they choose to start. Grey divorce also has a significant impact on family finances.
The division of assets and property can be fraught with peril. Dividing property that was accumulated during the marriage can be complicated because life insurance policies, Social Security benefits, investments, and retirement benefits must be considered. If one of the spouses depended on the other throughout the marriage, it might be difficult for him or her to transition to independence. Their life course is disrupted and they have to adjust the standard of living they have to ensure they can afford it, even after the divorce. For instance, if the husband has been in charge of handling the finances throughout the marriage, the wife might experience difficulty after the divorce
There is Light at the End of the Tunnel
Divorce can be difficult and emotionally draining, especially after long-term marriage. Joining a support group or finding a family lawyer you trust to guide you through the process can help you throughout the process.