Divorce can devastate women's retirement savings. Here's how to rebuild

Asia's Tech News Daily

Peter Cade| The Image Bank| Getty Images

Many people don't think their marriage will end in divorce. However, splitting up can significantly set retirement savings back, especially for women.

Divorced or separated women over the age of 65 had a median household income of $35,736 in 2016, trailing men in the same category who made nearly $38,000 annually, according to data from the Center for Retirement Research at Boston College. That lags married men and women over the age of 65, who in the same year had median household incomes of $67,404 and $64,524, respectively.

Women and men who had been widowed or never married also had less money to live on than their married counterparts, and women trailed men in every category.

More from Invest in You:
If you want to quit your job, here's what career experts say to do
Will the post-Covid world include a 4-day workweek?
This is the No. 1 reason people want to change careers (and it's not pay)

One major reason for this is the wage gap between men and women, according to Geoffrey Sanzenbacher, an associate professor of the practice of economics at Boston College and a fellow at the Center for Retirement Research. Women often take time away from work to raise children or care for other family members, which can mean they make less over time.

“That effects them forever, basically,” he said. In addition, divorced women are more likely to have children.

Of course, divorce also impacts men's finances, but usually less so than for women. Here's how women can start to rebuild their retirement savings after a divorce, according to experts.

Take stock of finances

During a divorce, assets accumulated during the marriage will be separated.

Following this process, it's important to women sure that appropriate changes have been made, such as canceling joint accounts, retitling assets in their name, updating account beneficiaries, reviewing insurance coverage and updating estate plans.

Then, women should look at their budget and rethink their current and future lifestyle, according to Linda Farinola, certified financial planner and president of PFG-Financial Planning and Management in Princeton, New Jersey. If they don't have enough to make ends meet and save for the retirement they want, they may need to make cuts now, such as selling a larger house to buy a smaller one.

While changing your budget might be painful, especially if you have children, it will help you in the long-term if you're able to save more, Farinola said.

“Sometimes you have to make choices that you don't necessarily like,” she said.

Another thing many women may need to consider after a divorce is their earning power, according to Shweta Lawande, a CFP and analyst at Francis Financial, a New York-based firm dedicated to serving women, couples and those experiencing divorce. Going back to work or looking for a higher-paying job could make a big difference in the long run.

“A 45-year-old woman who is able to increase her salary from $50,000 to $60,000 a year will bank an extra $210,000 by the time she retires at age 65,” she said. “If she were to invest this raise each month, the future value of her $10,000 increase could grow to nearly $420,000 assuming a portfolio return of 6% per year.”

Invest accordingly

Once you've readjusted your budget, make sure that you're putting enough money away to retire on time and with enough savings to cover your intended lifestyle.

The best way to make sure you're getting the most out of retirement saving is to do so in an investment account that will help your money grow over time. This includes an employer-sponsored 401(k) plan, which often comes with a match of funds, an individual retirement plan or even both.

Following a divorce, it's also a good idea to review and adjust the risk level in any retirement portfolio you already have. Taking on more risk may help you make up for some lost time, if you haven't been saving enough, while lowering the risk level in your portfolio will help protect your assets from loss.

Get professional help

A professional financial advisor or even a certified divorce financial analyst can help you sort through your money and plan for your new future.

“For women who weren't actively participating in their finances during marriage, it is important that they take the lead when it comes to their long-term financial planning and investing, either alone or with the help of financial advisors,” said Lawande.

A professional can help make sure you're thinking long-term and taking advantage of all the options available to save for retirement, including how to manage and draw on Social Security. For instance, some divorced spouses may be able to draw on their previous partner's benefit, meaning a larger monthly check.

Protect yourself now

For those who are not divorced or have been and are looking to get married again, the best thing they can do to protect themselves is to stay involved in financial decisions, experts said.

“Spouses who handled the majority of the finances during marriage have an advantage over the other spouse,” said Lawande. “Be aware of everything that is owned as a couple, including the value, location and tax implications of these assets.”

In addition, married couples should make sure that they are saving appropriately for retirement for both people, instead of saving only for one or counting on future earnings to put away more. In the event of a divorce, this means assets being split will put both parties in a better position.

SIGN UP: Money 101 is an 8-week learning course to financial freedom, delivered weekly to your inbox.

CHECK OUT: How to make money with creative side hustles, from people who earn thousands on sites like Etsy and Twitch via Grow with Acorns+CNBC.

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.

Internet Explorer Channel Network
Asia's Tech News Daily
News Related


One provision of the child tax credit that Democrats are fighting to make permanent may slash poverty by 19%

Mother Ladayna Jordan, left, leads her children, Alayna, Aedan, Aaliyah and Ahmier Davis, left to right, to the front door of Normont Elementary School on the first day of in ... Read more »

Things are looking up on the money side for Singaporeans: OCBC survey

SINGAPORE- After a year of pandemic-induced money struggles, Singaporeans are beginning to see a ray of hope about their financial affairs, says the third instalment of an annual survey by ... Read more »

If you don't get a 5% raise this year, you aren't necessarily taking a pay cut due to inflation. Here's why

HOUSTON, TEXAS – JUNE 09: Employees speak together at a Chipotle Mexican Grill on June 09, 2021 in Houston, Texas. Menu prices at the Chipotle Mexican Grill have risen by ... Read more »

The ‘Great Resignation' is altering the workforce dynamic — maybe for good

Sara Adamski Courtesy: Sara Adamski After the Covid-19 pandemic hit, Sara Adamski knew she had to make a job change. At the time, the 26-year-old was a cook in a ... Read more »

How to become an entrepreneur — while you're still in college

As the founder and director of two entrepreneurship-focused programs at Stevens Institute of Technology, Launchpad and iSTEM, I have overseen the creation of 12 officially incorporated enterprises, with many more on the way. It took about three years ... Read more »

From Buy Nothing to Freecycle, gifting groups help bolster budgets and build community

kate_sept2004 | E+ | Getty Images When Sherose Badruddin, 38, joined her local Buy Nothing group in Chapel Hill, North Carolina, five years ago, she did it purely to save ... Read more »

Will business travel be the same again?

(REUTERS) – The unprecedented halt to air travel during the Covid-19 pandemic cut planet-warming emissions, saved companies billions of dollars in tickets, and benefited staff who can lose weeks of ... Read more »

How to negotiate the salary for your first job offer

Getting your first job offer is exciting — joining the full-time workforce can mean a salary, benefits, and a path to financial independence.  But before jumping to accept an offer, ... Read more »

Here's what your monthly budget will look like if you retire with $750,000

There are an endless number of strategies that you can use to plan your retirement. Cashing out a set percentage of your investments every year once you retire can be ... Read more »

Ways to protect your health coverage from life's uncertainties

Manulife’s health and insurance plans, like LifeReady Plus (II), can help you plan for every stage of your life, with coverage that is customised to your needs. PHOTO: GETTY IMAGES ... Read more »

Here's the strategy this couple used to save $1.3 million and retire in their 30s

You've probably heard of “The Great Resignation” at this point. Justin McCurry was what some would call an early adopter. He and his wife planned to retire from their jobs ... Read more »

'We don't regulate euphoria,' says former SEC chairman Jay Clayton, who breaks down why social media will likely continue to influence investing

Jay Clayton speaking at the 2019 Delivering Alpha conference in New York.Adam Jeffery | CNBC Social media frenzies have encouraged retail investors to jump into meme stocks and certain cryptocurrencies, ... Read more »

Wealthy Singapore investors thinking of relocating family members: Survey

SINGAPORE – More wealthy Singapore-based investors are thinking of relocating family members either to the Republic or elsewhere than their peers in the region, according to a report out on ... Read more »

6 budget hacks to get your financial life on track

Getty Images The idea of making a budget may make your eyes glaze over. Yet it is fundamental to achieving financial wellness. “It's really hard to make any plan or ... Read more »

Envy Global's Ng Yu Zhi slapped with 18 more charges over billion-dollar nickel trading scheme

SINGAPORE – Businessman Ng Yu Zhi, who is embroiled in one of Singapore’s biggest investment fraud schemes, was slapped with 18 more charges over his role in a nickel trading ... Read more »

How billionaire Charles Munger got into properties

(BLOOMBERG) – Billionaire investor Charles Munger made a well-timed bet on suburban apartments in California – thanks to a neighbourhood teenager who showed up at his house with a Hebrew ... Read more »

Robinhood takes aim at college students

(NYTIMES) – Robinhood, the free stock-trading app with 21 million active users and counting, is about to hit the road for a college coffee house tour to drum up new ... Read more »

What has changed about the wealthy

Deck: Inheritors are shaking off the stereotype of the do-nothing trust fund kind Paul Sullivan (NYTIMES) – I began writing the Wealth Matters column in December 2008. The column was ... Read more »

Greenwashing threat grows with rise of sustainable investing

The growing threat of greenwashing in sustainable investing could result in resources and attention being diverted away from the world’s pressing sustainability needs. If you are among the growing number ... Read more »

As fears about inflation increase, here's how to protect your portfolio

Experts are sounding the alarm about inflation, and that has Americans worried about their retirement. Billionaire hedge fund manager Paul Tudor Jones told CNBC Wednesday that inflation poses a major ... Read more »

Suze Orman: Don't get a joint bank account. Here's how couples should budget their money

Money can be a sore subject in any relationship. Sharing bank accounts with your partner may make your budget issues even worse, according to Suze Orman, host of the “Women ... Read more »

The Great Resignation: Why millions of workers are quitting

Americans are leaving their jobs in droves. In August 4.3 million Americans quit their jobs. While some people have left the workforce entirely, job security and better pay are top ... Read more »

These are the top 10 retirement spots in the U.S.

Anya Berkut | Getty Images The Covid-19 pandemic has changed how many Americans view their retirement, whether it is pushing it back or starting it earlier than planned. Yet one ... Read more »

The Great Resignation may lead companies to offer employees financial wellness benefits

Pekic | E+ | Getty Images American workers are financially stressed and employers are starting to listen. Whether it is a response to the Covid-19 pandemic, the threat of losing ... Read more »

Signs of severe overpricing in key US markets

(NYTIMES) – The prices of stocks, bonds and real estate, the three major asset classes in the United States, are all extremely high. In fact, the three have never been ... Read more »

These homes are built with big 3D printers

A row of 3D printed homes in Nacajuca, Mexico. (NYTIMES) – Mr Pedro Garcia Hernandez is a carpenter in the south-eastern Mexican state of Tabasco, a rainforest-shrouded region of the ... Read more »

Retiring with $500,000: How much money you'll have in your monthly budget

Nobody wants to run out of money in retirement. Experts recommend taking up to 4% of your total nest egg annually in retirement as a way to make your funds ... Read more »

A majority of Hispanics aren't saving for retirement. Lack of financial knowledge is a factor, expert says

BraunS | E+ | Getty Images Many Hispanic Americans aren't saving enough — or at all — for retirement. More than two-third of Hispanic households aren't putting aside anything through ... Read more »

Here's how much your Social Security check will increase in 2022

Social Security beneficiaries will see a 5.9% increase to their monthly checks in 2022. That's much more than the 1.3% adjustment made for 2021, and the largest increase since a ... Read more »

3 lessons for first-time investors from a financial advisor

Individuals need to take control of their money, and while the pandemic upended the personal finances of many Americans, it also has made many more people aware of the need ... Read more »

Junior Achievement and CNBC host students to discuss sustainability, alternative energy and the health of the environment

Featuring the next generation of young leaders, CNBC and Junior Achievement explore the role of entrepreneurship, social enterprise, corporate social responsibility and the future of work while creating a more ... Read more »

Education Secretary Miguel Cardona says personal finance lessons should start as early as possible

There's a growing push for students to get personal financial education in high school. But, according to U.S. Secretary of Education Miguel Cardona, that might not be early enough. “When ... Read more »

Education Secretary Miguel Cardona on mask mandates, student loan forgiveness and financial education in elementary schools

Current Secretary of Education Miguel Cardona joins CNBC's Senior Personal Finance Correspondent Sharon Epperson to discuss his strategy on starting financial education earlier in schools, community college as a way ... Read more »

How financial empowerment helped one woman rise up from poverty

For poet and educator Jessica Helen Lopez, empowerment and financial knowledge go hand-in-hand. Lopez, who lives in Albuquerque, New Mexico, and was the city's poet laureate from 2014 to 2016, ... Read more »

Celebrity chef Guy Fieri: Put these 3 foods on your grocery list if you want to start cooking on a budget

Cooking at home can be an obvious choice for anyone tightening up their budget. But if you're not careful, you may find yourself cooking and eating the same dish every ... Read more »

The Straits Times Invest bags award for community investor education

SINGAPORE – Managing personal debt and building a retirement nest egg can often be complicated tasks for the man on the street to grasp, but these are some of the ... Read more »

Property no longer the best retirement investment in S'pore: DBS report

The DBS report also showed that the average property price per square foot has jumped 50 per cent since 2010. SINGAPORE – Property has long been seen as a pot ... Read more »

Banks cashing in on ESG bonds amid climate crisis

About US$750 billion worth of ESG-related bonds have been issued this year, compared with US$468 billion during all of 2020. (BLOOMBERG) – While many banks have been condemned for contributing ... Read more »

Future of work should mean working less

To limit work’s negative moral effects on people, we should set harder limits on working hours. (NYTIMES) – A dozen years ago, my friend Patricia Nordeen was an ambitious academic, ... Read more »

When frequent floods make insurance costly

A storm-damaged house at a busted levee on the beach after Hurricane Ida swept through early last month in Grand Isle, Louisiana. (NYTIMES) – Climate change is going to hit ... Read more »
On free-english-test.com you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic