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All women face significant obstacles to achieving a financially healthy retirement. But while married women have the comfort of being part of a team that is planning to retire together, divorced women are solely responsible for their own financial well-being into their later years. That means that for divorced women, the financial challenges posed by retirement are both multiplied and magnified.
For example, if you are a divorcing or divorced woman planning retirement, you will have to face the hurdles such as:
Longevity
The Social Security Administration reports that a man reaching age 65 today can expect to live, on average, until age 84.3. For women, that average life expectancy is 86.6. Women live longer than men; therefore, their retirements can be expected to last longer and cost more. That means you’ll need to have more money saved.
Less Income
The gender wage gap is a real thing. Women earn an average of 77 cents for every dollar earned by men. Earning less means not only do women have less money available to set aside for retirement, but also that their Social Security benefits will be significantly less than what their male counterparts will receive.
For the married woman, this is troublesome. For the divorced woman, it may be life-changing. With alimony “reform” sweeping the nation, permanent alimony which would have provided a divorced woman some financial security in her later years has been all but eliminated. Also note that if you were married less than 10 years, you won’t be able to collect Social Security benefits based on your ex-husband’s earning record.
Related: The Six Personal Traits That Help Women Successfully Survive Divorce
Less Savings
When you earn less, you save less. But even when women save aggressively, they are often saving for things other than their own retirements.
Women will often ignore planning for their futures to make sure instead that there is money for their child’s college tuition or first home. As much as women want to give their children a leg up, financially, it can do more harm than good if their own financial health is at risk.
Lower Earning Potential
Not only do most women earn less than men, but many women re-entering the job market after time away will find that they simply don’t command the income they once did. Taking time away from paid work, as rewarding as it can be in other ways, is a no-win situation, financially. To do a stint as a stay-at-home-Mom , women sacrifice their peak earning years and career momentum. Unfortunately, many of them don’t fully realize the financial ramifications of that decision until it’s too late.
Less Financial Literacy
In general, women are less familiar with financial matters and report less confidence in their ability to invest than men. I think this is a problem even for happily married women, but for divorced women, lack of financial literacy is a problem with immediate and potentially severe consequences. If you’ve left the major financial decisions to your husband during your marriage, you won’t have much know-how for investing when you’re divorced. Without that basic competence, a retirement savings strategy may seem out of reach.
What can you do?
As a divorced woman planning retirement, the cards are certainly stacked against you. Here’s what you can do about it:
Educate yourself.
Devote time and effort to learning the basics of personal financial management and investing. There’s nothing about this that can’t be learned – it’s a skill just like any other, and if you commit to getting up to speed, you will.
Get on it early.
As a divorced woman you need to begin your retirement savings as soon as possible. If you are in the settlement negotiation process, make sure your team is advocating for terms that will serve you well where retirement is concerned.
Related: How to Protect Yourself If You Suspect Your Spouse May Be Dissipating Assets
Save as much as you can.
It’s important to think of retirement savings as a commitment. It’s not something you do with any money you happen to have left over at the end of the month; rather, your savings should be a high priority. Prioritize needs over wants in your spending, and make no mistake: Retirement savings is an absolute need.
Modify your lifestyle.
As painful as it can be, the reality is that divorce deals a significant financial blow – and women, unable to recoup those losses in the job market as quickly as their ex-husbands can, take the blow harder and suffer longer from it. Many divorced women simply can’t live as they used to while married.
You might need to live somewhere less expensive. You might need to put off major purchases that aren’t absolutely necessary – no more trading in your car for a new one every three years, for example. Wherever you can cut back on your current spending in favor of saving for the necessities of later life, do it.
Work with professionals.
If you are re-entering the work force, you want to earn the most you possibly can. It’s worth your time to consult with a vocational expert to see where your skills command the highest income in the job market where you live.
To make your settlement last as long as possible and keep your tax exposure to an absolute minimum, you’ll need to consult with a financial advisor . For the best, most appropriate guidance, find someone with expertise in the specific financial needs of divorced women.
With a commitment to education, good planning, disciplined savings, maximized income, and professional guidance, there is good reason for you to expect a financially secure retirement. On the other hand, without those things, there is good reason for concern. I sincerely hope you’ll make your secure retirement a priority, and not a cause for worry.