According to a recent report by CNBC, divorce can have a detrimental effect on a woman’s retirement savings. The national news station set out to find out why that’s the case.
They discovered that a divorce’s impact on a female’s retirement savings is likely tied to them not adjusting their lifestyle to account for living as a single person in their new stage in life (post-divorce).
What spending power do women have both before and after divorce?
Data compiled by Boston College’s Center for Retirement Research in 2016 showed that separated and divorced men over age 65 had a median income of $38,000 per year. The female counterparts brought in $35,736 annually. In contrast, married women and men earned as much as $64,524 and $67,404 in median income annually that same year. As you can tell, there’s a stark difference in the buying power of the married couple compared to individually.
How can you curb the impact of a divorce on retirement savings?
When asked how women can reduce the chances of their divorce putting a dent in their retirement savings, financial planners cited the benefits of women taking on higher-paying jobs in the wake of their divorces. They also noted that it could be beneficial to keep their funds in a high-yield savings or investment account so that they can grow what they do save.
As for investments, they point out that if your funds have typically been tied up in low-risk investments, then it may be best to look into switching over to high-risk ones to make up for the lost time. They also note that seeing a financial planner as part of your divorce process is critical. They mention that it’s imperative that women also take more of a hands-on approach with their finances should they decide to remarry and learn to budget off of a single income instead of a combination of their and their spouses in that situation.
Your divorce doesn’t have to be financially devastating. While Texas is a community property state, meaning that all marital assets are split equally between spouses, there’s still room for negotiation. You may want to come up with a convincing argument for why you should receive a larger share of the assets to use with your spouse during negotiations and convince a judge of the same.