When You Must Go It Alone – Financial Independence And Divorce
I am very fortunate to be able to say that I am a happily married woman. Even so, I have had divorce on my mind lately because I recently obtained the Certified Financial Divorce Analyst (CDFA®) designation. Studying this curriculum has deepened my understanding of the divorce process in general. More specifically, it has given me a deeper knowledge of the short-term and long-term consequences of asset split decisions during divorce.
The motivation to obtain this designation came from a sudden flood of divorces among my acquaintances, friends, and clients. I searched for tools to be better equipped to help these couples who have two things in common: they are baby boomers and they are calling it quits.
Where general divorce rates in the US have stagnated, the so-called “gray divorce” rate in people over 50 has doubled since 1990. Currently, one in four divorces is occurring in couples over the age of 50.
Some of the reasons are:
- Longevity: we are all living longer and women even more so than men
- Expectations: we want to live fully
- Acceptance: divorce no longer carries a big stigma
- Independence: more women have careers and thus more financial independence
The later in life the divorce happens, the harder it tends to be to recover from the financial blow. And this is especially the case for women over 50 who have interrupted their careers to raise a family.
Add to this the finding that a majority (56%) of married women still leave major investing and financial planning decisions to their spouse, according to the UBS Global Wealth Management report Own Your Worth
Many women face a reality that divorce might remove their spouse and with that their financial security and guidance. Here are some things to do right now to be better prepared in case this happens:
1. Participate fully in your married financial life
Take an active part in your current married financial life. Do not hesitate to ask for explanations in case your spouse or financial advisor starts throwing around concepts you are not familiar with. You should understand all the components of your joint balance sheet.
2. Have some financial independence while you’re married
Maintain credit in your own name and keep a separate bank account.
3. Make sure you obtain sound financial guidance during the divorce
When negotiating how your marital property will be split, make sure you work with a knowledgeable Certified Financial Planner™ professional or Certified Divorce Financial Analyst. And once the dust has settled after your divorce, do not make any rash financial decisions, but work with a Certified Financial Planner™ professional to draw up a financial plan for your new life.
As always, please contact your financial advisor at CFM for any questions.