Divorce unleashes a maelstrom of emotional and financial upheaval, often leaving women, in particular, grappling with an uncertain future. The reasons behind women bearing the brunt of the financial toll are manifold: societal norms, economic inequality, and potential career sacrifices made during marriage.
The fact that most women are the primary caregivers for their children further compounds this effect. Hence, it is critical for women to remain vigilant during their marriages, taking proactive measures to safeguard their financial stability in case of divorce.
A Typical Case
After the birth of her daughter 20 years ago, New York Times reporter Lela Nargi became the primary caregiver since she was a freelance writer while her then-husband continued his university job.
They had modest individual incomes, prompting them to pool their assets and finances. More of Nargi’s income was allocated towards monthly expenses, whereas a larger part of her husband’s income went into his 401k.
In theory, both parties should share the 401k equitably in the event of a divorce. However, reality hit when they separated. Nargi realized the financial insecurity she unknowingly plunged into, a stark reminder of the importance of individual financial vigilance.
Life changes significantly
Nargi is far from alone in this predicament. Indeed, many divorced individuals face the grim prospect of inadequate savings for retirement at age 65, a situation that threatens their quality of life.
According to Maria Cancian, dean of the McCourt School of Public Policy at Georgetown, married couples enjoy economies of scale, relying on each other for support. However, once the ties end through divorce, this advantage is gone.
Suddenly, you are shouldered with the entirety of your expenses, making clawing back to your pre-divorce financial status a daunting challenge.
Financial Advice a Necessity
New York, along with 40 other states, follows an equitable distribution law. This means that both parties share marital assets and debts fairly, though not always equally. While legal counsel is crucial, consulting a financial expert is equally important for assistance in navigating complex matters like the tax implications of retaining assets such as stock options or a house.
Moreover, your tax status will change post-divorce. Often, many women transition from filing jointly to filing as head of household, which can influence their tax rates and the amount of their standard deduction. Navigating these changes can be daunting, but with the right financial advice, you can adapt to your new financial reality more smoothly.
Financial Education Critical
While it’s true that hiring a financial expert can be the optimal choice, it’s also a fact that their fees can seem daunting in the face of dwindling finances post-divorce. Fortunately, the digital age provides a plethora of online resources that can become an invaluable lifeline in these circumstances.
Organizations such as SAS for Women host complimentary events like “Preparing Your Financials for the Negotiation Table,” empowering women with the knowledge necessary to regain financial stability.
Nonprofits like Savvy Ladies also play a critical role in advancing financial literacy, offering free advice and education to women in need. Also, make financial books your friend. A simple online search can reveal numerous books designed to guide women through the financial aftermath of a divorce.
Final Words
“Although the financial rebuilding process can be challenging, it is surmountable, even for those facing divorces later in life. With the right approach and resources, achieving financial stability and independence is possible, even after a divorce,” says divorce attorney, Galit Moskowitz, of Moskowitz Law Group, LLC.
