Women, Divorce and Retirement: Build A Multi-Resource Support Team
Getting a divorce is a financial, as well as an emotional, decision. Couples go from their income supporting one household to the same income supporting two households. Retirements, stocks, and other financial assets are divided. The article below outlines one woman’s financial journey with divorce and post-divorce life, including what she wishes she would have done differently.
This article was originally posted here.
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
“Sabrina,” 53, recommends women on the cusp of divorce assemble a team of advisers including financial experts, a divorce coach, and a mental health professional to guide them through the long, often painful, process.
How has your divorce financially impacted your retirement plans?
It has had a devastating impact. I probably will never recover from the inequity.
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 was aware of basic information and did research. I am also personal friends with one of the top certified financial divorce advisors in the United States. I would hire one today, before ever hiring an attorney again on retainer with unlimited billable hours.
From my experience with the attorneys, and I had several, they would just drive their agenda anyway and minimize the necessity or the validation of the data and not do what is required.
Also, this would keep people in conflict and returning to the courts and their attorneys even after the final decree. And that’s what they can bill for: conflict.
Was your divorce attorney concerned about your retirement finances? Was the divorce judge?
No, I believe the attorneys were not at all concerned, and I had a few. They told me to get a job (which I did) and refused to address what the actual amounts of all the retirement assets were or any marital asset for that matter. I especially feel the judge was at fault and had a fiduciary responsibility in a court of equity to stop the attorney games and get to the facts. The language used in my court documents is very vague and/or ambiguous or just silent. It doesn’t even have any basic Internal Revenue Service language to divide the assets so to this day I still can’t get these marital assets after 12 years.
It is my belief that dividing marital assets, aside from custody/support, is paramount to getting a divorce and the powers that be behave negligently and sloppily. They don't do the proper due diligence or intentionally commit outright malpractice -- all under their legal immunity. And then they keep people going back into court and drag it out even more and erode most people’s life savings and their quality of life.
How would you describe the quality of your financial life post-divorce?
It’s been a struggle. I was nearly bankrupt and had to pull myself out of what I felt like was financial quicksand. Was a stay-at-home mom for most of the 20+ year marriage with three young children. I disrupted my career to raise the children and then, upon returning to the workforce, faced the disparity of an income gap and earning potential due to the break in my career. A formula for child support and a minimum wage job is barely surviving.
Plus, many women are made dependent on an ex-spouse to pay child support and/or maintenance; and this is a person whom they can’t trust to begin with or doesn’t pay what’s ordered. There is no consequence nor accountability, and it takes months to years to settle while back in the court system.
I was also saddled with marital debt and there was pressure for me to file for bankruptcy.
What other information would you like to share with women in similar situations?
In hindsight, I believe the lawyer is the last person to the table. What you need is a team approach of a financial neutral, a divorce coach to help with the emotions of divorce and all the nonlegal areas, and a counselor/ therapy support for the kids or if there is any domestic violence. Then when you have this team in place and create a foundational starting point of family dynamics, a lawyer can apply the law and protect the parties especially in equitable distribution states like New York and also in the community property states. We blindly put our 100+ percent trust in one person, this lawyer, to get divorced and it just doesn’t work and becomes an adversarial, litigious, costly, and lengthy process.
I haven’t received any marital portion of the marital retirement assets in my late 40s and now 50s due to a defective settlement/transcript that has had a devastating financial impact on my life. This is the result of the judge who signed it, and a qualified domestic relations order (QDRO) that cannot be executed as well as being unfairly assigned all the marital debt. I also have not received back child support payments. Consequently, I have no savings or assets to buy out my ex from the family home. I am making under $50k a year, and now find myself in a devastating housing situation due to rising prices for rentals. I may well find myself working well into what would have been my “retirement years.”
We asked Lili A. Vasileff, president of Wealth Protection Management in Greenwich, CT, a fee-only CFP®, mediator, Certified Divorce Financial Analyst®, and litigation divorce financial expert for her thoughts on Sabrina’s situation. Vasileff agrees with building a team of support and outlines additional steps to take.
Often in hindsight, it comes as no surprise that we wish we did things differently. In divorce, there is the added regret that some decisions cannot be done over and have a long-lasting impact on the rest of one’s life. In Sabrina’s case, she expresses many regrets and describes her current state of financial hardship. What we do not know is the total context for how her divorce unfolded and what her actual outcome was.
In my experience, the number one regret of many home makers in long-term marriages is that they felt rushed or coerced into making financial decisions they did not fully understand.
Here are some pointers for what to do BEFORE you divorce:
Prepare, prepare, prepare. Gather your financial information: know what it costs to live; know where your assets are and what debts you have. Know your state’s divorce laws and what are typical outcomes for a person in your situation. Find experienced attorneys and interview them well.
Know what you don’t know. If you are weak on understanding financials, hire a divorce financial planner. If you need emotional support, hire a divorce coach. Build your team.
Understand that the divorce process (mediation, collaborative or litigation) is a marathon and not a sprint. Pace yourself. Budget for the cost of divorce.
Hold yourself accountable and responsible for advocating for your own needs and interests. No one knows what you need or want, but you. You must not blindly abdicate this role to anyone, including your attorney.
What can Sabrina do post-divorce now 12 years later?
She mentioned that she has not received child support. States legislate the enforcement of child support and can garnish wages for this purpose after just missing a few child support payments. It costs nothing for the payee.
As soon as something goes wrong, act! Sabrina mentions that her QDRO was not executed. One should require that a QDRO specialist be addressed in the divorce agreement. Be specific about who will prepare the QDRO, how much it will cost, when it will be started, and how decision/cost will be shared between ex-spouses. It is not too late to reopen a QDRO that was improperly executed to protect your rights, and the sooner you do, the better. However, if the assets are gone, then you must sue to enforce your divorce judgment.
Sabrina says that all marital debt was assigned to her. Without any context or facts, it is tough to know what this means relative to the total marital estate and her final outcome. Did she agree to it? Did the judge order it? What kind of debt – the mortgage with the house? One negotiates debts as they do for assets. Often, it is best to pay off debts from the marital assets before dividing the balance between spouses. I recommend having a backup plan if the debt is in your name and your ex-spouse is supposed to pay it off. Creditors will always go after the borrower and Sabrina’s recourse to protect her credit rating is to sue under her divorce decree.
Sabrina said she was pressured to file for bankruptcy, but we assume she did not. Before bankruptcy, which should be your last resort, try to negotiate with debt holders, try to consolidate, and work with a Credit Counselor or Qualified Agency, etc. Always check your credit rating regularly and make corrections to any misinformation.
Sabrina has no savings or assets to buy out her ex from the home. We do not know how much equity Sabrina has in the house. There are many options open to her: sell the house, leverage the house, work out with her ex-spouse installment payments of equity over time, ask her ex to refinance the house in his name/take title to the house and have her live in it as his tenant. Her ex has waited 12 years to get his equity out. We do not know what arrangements he may agree to at this point.
Renegotiate post-divorce: If her ex has failed to make back payments in child support, maybe Sabrina can negotiate for more time to stay in home, or, for greater equity in her home, or, not have to move out at all.
Sabrina may have to work into her retirement years. Courts cannot force a person to work past full retirement age. They can compel support payments, but not actually make a person work. If her support ends and she has a $50,000/year job, realistically she may have to work longer to have some savings and meet living expenses.
She can also apply for Social Security on her ex-spouse’s record when he turns 62 if she meets all criteria. This additional income will help her cash flow. Social Security benefits are government entitlements and not rights that can be assigned in a divorce judgment.
Best advice is for Sabrina to work with a financial planner to plan ahead and have a roadmap for her retirement. She has options to consider for improving her financial situation and hopefully, she looks forward to her future and not backwards to her past.
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