By Mary Helen Gillespie
“Maureen” of Ohio has found her post-divorce lifestyle to be financially, emotionally, and mentally fulfilling. Here’s how she achieved these goals.
How has your divorce financially impacted your retirement plans?
While my income was cut in half after the divorce, I was finally in charge. While I had to watch my finances closely and budget differently, I no longer had to endure my ex-husband’s spending sprees. After a year I was in a better financial place as I was able to prioritize needs vs. wants. I saved every month for my children’s education and my retirement, foregoing expenses like fancy cars and expensive home decorating that my ex-husband insisted upon.
Did you hire a financial adviser, a CPA, or other finance professional to help you plan your retirement needs during the divorce proceedings? Would you today?
I hired a financial adviser after the divorce, and they were a huge help. I highly recommend engaging a trusted professional for financial advice.
Was your divorce attorney concerned about your retirement finances? Was the divorce judge?
How would you describe the quality of your financial life post-divorce?
My financial life was challenging as child support did not even cover daycare costs. I had to watch every penny. Being in charge of my own finances was liberating and I started teaching my children about the impact of small expenses like fast food.
What other information would you like to share with women in similar situations?
Do not despair. I ended up with a smaller house and a smaller car, but I was happy and so were my children. While their dad would lavish them with expensive gifts, they told me they were happiest hanging out at home with me. Many of the gifts stayed in their boxes until they were eventually given away. Today I am in excellent financial shape.
Retirement Daily shared “Maureen’s” story with Jeffery Nauta, CFA, CFP®, CAIA®, CDFA®, and principal, at Henrickson Nauta Wealth Advisors. Here are his thoughts for “Maureen” and other women moving forward after divorce.
What advice would you give to other women currently facing the same challenges this individual faced to improve their divorce outcome (financial or otherwise)?
- It’s never too early to engage a financial adviser, even as you’re going through the divorce, preferably a CDFA® (Certified Divorce Financial Analyst). A knowledgeable adviser will help with the asset division, can discuss financial planning and tax strategies around the divorce, and provide expertise in the cases of more complex balance sheets. Don’t count on your attorney or the judge to know investments, financial planning, and tax planning!
- Don’t make any big purchases or changes in the first year following the divorce. Divorce can be traumatic and that first year is spent recovering and should be spent finding your financial footing.
- Don’t try to buy the kids’ love! She mentions her ex-husband spent money on lavish gifts but the kids appreciated her time more. We’ve seen this far too often and to the point that it has ruined individuals financially.
Do you have any advice for this woman that she could implement now given her outcome?
Make sure she’s taking advantage of all of her employee benefits. Does she have a dependent-case FSA that can be used to pay for daycare on a pre-tax basis?
What could this woman do to increase her income post-divorce, especially in retirement?
Remember that women tend to outlive men and that requires more planning for a longer retirement. If she’s not already doing so, consider delaying Social Security to age 70. Oftentimes, you may find yourself in a lower tax bracket – make sure you’re filling up lower brackets and consider Roth IRA conversions.
What is the one area of advice you ALWAYS give your divorcing clients regardless of wealth?
Don’t make any big purchases or changes in the first year following the divorce. Divorce can be traumatic and that 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.