As if the emotional hit of a divorce isn’t hard enough, research finds that for women, the financial hit may be worse.
It is estimated that after a divorce, the average woman can experience anywhere from a 27% to 73% loss in her standard of living. No wonder the top two divorce concerns cited by women across various generations in a Worthy.com survey were living on one income and the cost of the divorce itself.
In addition, 46% of divorced women experienced financial surprises along the way. Common divorce surprises include assuming they could keep (and afford) the family home, less child support/alimony than expected, more family debt than expected, miscalculation of family assets and underestimating divorce costs.
Thirty-eight percent of women over the age of 55 reported concerns regarding retirement. Worried about outliving their money, 22% of boomer women said they were focused on building their investment portfolios over the next five years compared to 12% of Gen Xers and 10% of millennials.
According to the Women’s Institute for Financial Education (WIFE.org) seminar Second Saturday: What Women Need to Know About Divorce, here are three common pitfalls women should avoid.
Not taking the time to prepare: Most women jump into the divorce without doing their research first. Here are questions they need to ask. Do you have a complete understanding of your financial picture as a couple/family? Do you have copies of all your financial records, business records, banking information, 401Ks, IRAs, loan applications, insurance, deeds to renal property, credit card statements, trusts, brokerage statements and insurance policies? Should you negotiate a lump sump or monthly alimony? What are the tax consequences? Have you consulted with legal and financial experts to get an understanding of what’s involved and when is the best time to move forward? Will you or your husband receive an annual bonus that you should wait for? What is the worst case financial scenario and how can you be prepared?
Sticking your head in sand: Divorce can be overwhelming, so sometimes it feels easier to just be in denial. It’s also easy to let emotion take over, and it’s hard to look at the situation objectively. But women must focus on what’s in their best interest financially over the long-term. The more informed you are the better; ignorance will lead to long-term regret. It may be the last thing you want to do or think about, but you do have to take control of your finances.
Thinking you have to do it all alone: Experts say you shouldn’t be shy about asking for help when considering a divorce. Whether it’s finding a therapist, hiring a divorce attorney or relying on your good friends and family, make it a priority to reach out.