Financial stability for women after divorce
Due to the current state of the economy and labor markets, it is vital for anyone who has NOT been the primary breadwinner to understand this information.
According to the Small Business Administration, women own over 12 million businesses and employ over 10.1 million workers1
Women control 85% of consumer spending2
It is estimated that by 2030, women are poised to control $30 trillion in investable assets – a number that approaches the annual GDP of the United States3
So, if someone is financially unstable after divorce, our local economies can suffer. Financial stability for women after divorce is critical not just for personal and family success, but for our economy to thrive as well.
I’m particularly focused on women because one study estimates that a woman’s income decreases about 41% after divorce. Add to this, a UBS study found that 56% of women report deferring to their spouse on financial planning and investment decisions5, it’s unsurprising that many women find themselves financially worse off following a divorce.
You may be asking, “what does she mean by financial stability?” It is more than maintaining a stable income while avoiding debt; it also includes a component for saving for the future and risk management. Risk management would entail things like life insurance, homeowners & auto insurance as well as disability coverage and Long Term care insurance, etc.
Let’s take a minute to examine problems post-divorce.
It is critical to acquire a good marital settlement agreement (MSA) to avoid problems post-divorce. This largely depends on the professionals you hire. I have seen great agreements and I have seen horrible ones.
Once the divorce is final, clients have an executed marital settlement agreement along with their divorce decree from the court. If they do not follow this agreement, they will be held in contempt of court, and their spouse can take them back to court to have it enforced.
If the marital settlement agreement is not worded appropriately or the language is not specific enough, this can create problems post-divorce.
Some examples:
The agreement does not specify a time frame post-divorce that a retirement plan is to be paid out to the other party, for instance 30 days from court approval of the MSA
During the period between the date the agreement is signed and when the party receives the asset, who would get dividends off the investment account? (Dividends are income, so this would be missed income by the receiving party)
If you don’t have a well-written MSA, there’s not a lot you can do because you’ve signed off with the court, so, in most states, it can’t be changed unless you can prove fraud! Having a financial professional review your document or be a part of the team BEFORE you sign the MSA is HUGE!!!!
Having a financial plan in place before you divorce is key to success too; how will you know if you can comply with what you are agreeing to if you are not looking ahead to the future and the impact your MSA will have?
You should be able to articulate to some degree:
where you stand financially today
where you stand when you sign the MSA
where you stand 20+ years down the road
No one in divorce except for a CDFA® or financial planner specializing in divorce helps you understand this; it is just not the role of the other professionals in divorce. Their work is transactional, meaning you hire them to help you legally navigate your divorce, not AFTER the divorce. They are not there to give you financial advice!
Having a financial plan can help clients see how different offers from their spouse can impact them long-term and GIVE THEM PEACE-OF-MIND TO MAKE DECISIONS with confidence.
The Financial Knot® is a haven for women in divorce. We are here to support you every step of the way. Don't let financial uncertainty add to your stress—let's plan your path to a secure future together!
The Financial Knot® is another business name for Independent Advisor Alliance, LLC. All financial planning advice is offered through Independent Advisor Alliance, LLC, a registered investment advisor.
1 US Small Business Administration, Office of Advocacy, March 21, 2023
2 “Who Runs The World? Women Control 85% Of Purchases, 29% Of STEM Roles,” FORBES, March 7, 2024
3 “Women as the Next Wave of Growth in U.S. Wealth Management,” by McKinsey & Co., July 29, 2020
