Lots of things have changed for better or worse. In the plus column: higher education, greater job opportunities and more “you can have it all, baby.” On the minus side: higher divorce rates, less “happily ever after,” and more “you can do it all, baby.” This shift in our cultural norms is reflected by modified family law statutes that trend toward spousal support of a shorter duration. Thus, the era of being comfortably supported for a lifetime in the event of divorce is over. Even a bona fide homeschooling, stay-at-home mom (or dad), or time spent in support of a spouse’s career, no longer comes with a financial guarantee.
Actuarially, if a man is killed in an accident, the monetary settlement for his life is worth much more than if the victim is a stay-at-home mom. Why? Because his consistent work history has a higher value, as opposed to the woman who experiences periodic employment due to child rearing.
In our society, parenting is deemed essential for helping our children become responsible and fully functioning adults. But the act of parenting, or caregiving, is not seen as “work experience.” The more time you spend in this unrecognized “job,” the less potential value you have as an employable person who can earn a living wage.
So, what can you do to prepare yourself financially in the event of divorce?
- Be realistic: Recognize that divorce happens, and that support provides less money for a shorter period of time than what you hoped it would.
- Be aware: Know the risks you take when you remove yourself from the workforce for longer periods of time, regardless of your motivation. Keep your skills up. You may one day have to return to the workforce.
- Be involved in all financial decisions: Half of everything is yours—assets and liabilities. Know them, understand them and protect them. Here are 2 recent blogs on this very topic: The Hidden Benefits of “Tax Season”; How much do you know about your marital finances
- Participate in investment and retirement planning with your spouse: Maybe you haven’t had the opportunity to fund your own retirement accounts; you’ve had a part-time job while your spouse has had a career. Encourage full funding of your spouse’s retirement plans. At divorce, 50 percent of these funds may be the only retirement assets you have.
- Protect yourself: Consider a post nup if you sense your spouse is getting into territory that may jeopardize your financial future.
Be smart and arm yourself with the knowledge you need to ensure your financial future, no matter what the future holds. Who is counseling you on your financial future? A Certified Divorce Financial Analyst is uniquely qualified to help you make decisions, even before a separation.