By Mary Helen Gillespie
“Maureen” from Ohio has found her post-divorce lifestyle to be financially, emotionally, and mentally fulfilling. Here’s how he achieved this goal.
How will your divorce financially affect your retirement plans?
When my income was cut in half after the divorce, I was finally responsible. Although I have to monitor the finances and budget differently, I no longer have to bear the expenses of my ex-husband. After a year I am in a better place financially because I can prioritize my needs vs. I save every month for my children’s education and my retirement, previous expenses like fancy cars and expensive house decorations that my ex-husband pushed for.
Have you hired a financial advisor, CPA, or other financial professional to help you plan for your retirement needs during the divorce process? Are you today?
I hired a financial advisor after the divorce, and they were a big help. I highly recommend engaging a trusted professional for financial advice.
Is your divorce attorney concerned about your retirement finances? Is it a divorce judge?
How would you describe the quality of your financial life after divorce?
My financial life is a challenge because child support doesn’t even cover the cost of daycare. I had to watch every penny. Being financially responsible on my own was liberating and I started teaching my children about the impact of small expenses like fast food.
What information would you like to share with women in a similar situation?
Do not despair. I ended up with a small house and a small car, but I am happy with my children. While their father would lavish them with expensive gifts, they told me they were happiest hanging out at home with me. Many gifts remain in their boxes until they are finally given away. Today I am in excellent financial shape.
Retirement Daily shares the story of “Maureen” with Jeffery Nauta, CFA, CFP®, CAIA®, CDFA®, and principal, at Henrickson Nauta Wealth Advisors. Here are his thoughts on “Maureen” and other women moving forward after the divorce.
What advice would you give to other women who are currently facing the same challenges this individual faced to improve the outcome of their divorce (financial or otherwise)?
- It’s never too late to engage a financial advisor, even if you’re going through a divorce, preferably a CDFA® (Certified Certified Financial Analyst). A knowledgeable advisor will help with asset division, can discuss financial planning and tax strategies around divorce, and provide expertise in more complex balance sheet cases. Don’t rely on your lawyer or a judge to know about investing, financial planning, and tax planning!
- Do not make any large purchases or changes in the first year after the divorce. Divorce can be traumatic and the first year is spent recovering and should be spent finding your financial footing.
- Do not try to buy kids’ love! She says her ex-husband spends money on lavish gifts but the children value their time more. We have seen this often and it ends up ruining individuals financially.
Do you have any advice for this woman that she can do now given the results?
Make sure he takes advantage of all his employee benefits. Does she have a dependent’s FSA that she can use to pay for daycare on a pre-tax basis?
What can these women do to increase their post-divorce income, especially in retirement?
Remember that women tend to outlive men and that requires more planning for retirement. If he has not done so, consider delaying Social Security age 70. Often, you may find yourself in a lower tax bracket – make sure you fill up the lower bracket and consider Roth IRA conversions.
What is one piece of advice you always give to your divorce clients regardless of wealth?
Do not make any large purchases or changes in the first year after the divorce. Divorce can be traumatic and the first year is spent recovering and should be spent finding your financial footing.
Learn more by watching our webinar, Retirement Roundtable: Women, Divorce & Retirement, with Robert Powell and panelists Michelle Petrowski and Bonnie Sewell.
To find a financial professional with experience in divorce, visit the Institute for divorce Financial analysts website.