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Women, Divorce and Retirement: Divorce Puts Retirement on Hold – Permanently

This ongoing Retirement Daily Special Report spotlights, from the checkbook to the courtroom and beyond, the true accounts of women in retirement following a divorce. Many divorced women face devastating personal-financial ruin after the end of a marriage. Learn how some survivors are moving forward and hear from Certified Divorce Financial Analyst (CDFA®) experts about current or next steps not just for the women who wrote to us but for all women facing the same challenges.

By Mary Helen Gillespie

“Shannon,” 61, of New Hampshire, outlines the financial lessons learned after her 33-year marriage ended.

How has your divorce financially impacted your retirement plans?

Drastically. I have no real plans to retire.

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?

No, but I would if I were getting divorced today.

Was your divorce attorney concerned about your retirement finances? Was the divorce judge?

My divorce attorney was supportive of my retirement status. The judge was not.

How would you describe the quality of your financial life post-divorce?

I worked part-time during my entire 33-year marriage. Today, my financial status is much lower than when I was married.

What other information would you like to share with women in similar situations?

Make sure to look into his pension (if he has one).


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Retirement Daily shared Shannon’s story with Deanne Phillips, CFP®, CDFA®, ABFP, director of Client Learning & Development at Annex Wealth Management. Here are her thoughts for Shannon and other women facing similar issues.

First, the good news: the overall U.S. divorce rate is dropping. Now the sad news: The rate of “grey divorce” is surging – double the rate of 1990. Today, older couples over the age of fifty represent 25% of all divorce cases.

“Older” can mean “less simple.” Since many older couples have accumulated a more complex estate, the separation of assets could be trickier – even more so for someone on the cusp of retiring.

Divorce is often accompanied with plenty of emotional trauma. And when divorce happens to older women, their standard of living plunges as much as 45%. Few people want to feel they have to go back to work at age 65.

Add to those concerns the common feeling women experience of being undereducated when it comes to their finances, the gender wage gap, and women outliving their physical partner, and you’ve discovered a formula for potential personal budgetary crisis.

Let’s face it -- when going through emotional distress in a transition, focusing on what your future will look like and the many financial decisions that need to be made in the present can be tough. Most people just want to “get it over with,” leading to concessions that are later regretted.

Here are tips to help sidestep some common divorce issues:

  • Copy all financial records and keep them in a safe place. This includes bank accounts, three years of tax returns, pension and investment statements, pay stubs, employment agreements or contracts, and any financial awards like options for you and your spouse. Also have a copy of debts, loans, mortgages, and bills. This can help save the time and money of going through a recovery process later when it comes to reconciling income, assets and debts.
  • Give good consideration around the family home, and whether to keep it. Whatever the motivator – whether it’s keeping continuity with family, sentimentality (after all it’s where the memories were generated), or maybe the idea of moving while transitioning through the divorce is simply overwhelming – remember that houses cost money to maintain, so cash flow becomes even more important. If financing is needed, speak with a lending professional first. Don’t assume you can take out a mortgage.
  • Understand tax implications of all the financial assets because they are not all the same. Equalizing the assets from a taxation viewpoint and knowing how the assets will be split and paid out– including any pensions that either of you have – is important. This is where a financial planner or CDFA can aid by laying out the financials and showing how income and assets work for you after the financial separation.
  • Ensure the continuation of income. If receiving spousal support, secure a disability policy on the payor if they are still working, and a life insurance policy on them to ensure that you continue to get paid for the duration the decree states, no matter what happens to your ex-spouse. Be sure and include language in the marital settlement agreement around accountability of the payments of those premiums, especially if your ex is paying them, so they do not lapse.
  • Understand your Social Security benefits. If you were married over ten years (and not remarried) you are entitled to half of your spouse’s benefit or 100% of yours, whichever is higher. It does not matter if they remarry and it doesn’t impact their benefit at all, so this is not a negotiable asset in a divorce negotiation.
  • Tax returns in the year of divorce can be complex. Remember a divorce is a change of circumstances that is effective on the date the decree is stamped. You are then considered divorced for the entire year – even if it is on December 31st. You may be filing your taxes as single or head of household, but you still might have marital income for that year. Since the divorce year income might be complex, consider using a tax professional to help you.

And finally, even if people are doing the divorce themselves (pro se) and feel they have an amicable enough relationship to do so with a mediator, we always recommend having an attorney or someone advocating for you. There are so many considerations and having the right team at the time to ensure that you not only financially and emotionally survive the process, but helping to understand that one can thrive after, is important. It helps you see if you will be ok. And ultimately, that’s what women want to know while they are going through this process: Will I be ok?


Learn more by watching our webinar, Retirement Daily Roundtable - Women, Divorce & Retirement: Creating Your New Personal Finance Plan, with Robert Powell and panelists Amy Shepard, Rick Fingerman, and Katie Marsden.

To find a financial professional with experience in divorce, visit the Institute for Divorce Financial Analysts website.

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