This article from Money, “This is The Single Best Way Divorced Women Can Secure a Successful Retirement,” begins by noting the frequently referenced “divorce gap.” This was documented in 2008 by a professor at the University of Essex, who found that women who divorce see their income fall by more than a fifth, while the men they divorced see their household income rise by about a third. A more recent study offers more nuanced scenarios, with a more positive outlook.
A more recent study from the Center for Retirement Research in Boston College found that formerly married, but now divorced women historically are better off than single, never married women because of the assets they have accumulated before divorce. The biggest difference comes from one asset—home ownership—because divorced women are more likely to own a home than singles.
However, home ownership is a double-edged sword, say many divorce lawyers and financial advisors, who find the new data both interesting and unsettling. They say that keeping the house isn’t always the best move. Many newly-single women find they don’t have the resources to keep up with mortgage payments, maintain the property, pay taxes and deal with an unexpected crises.
One advisor says she’s concerned that these new numbers will lead to women who can’t necessarily afford to maintain a home to hang on to their homes.
However, a researcher involved in the study maintains that while the study mentions homeownership, there’s a bigger point being made. Married women who divorce benefit from receiving a share of marital assets. Single, never-married women do not and must rely solely on themselves for saving and accumulating assets that can be used to finance their retirement.
A critical fact that women who are divorced must do: whatever assets they get in the divorce settlement, commit to keeping those assets intact for retirement. It’s easier to do this with a house. However, it’s tempting to dip into assets that are intended for retirement.
Being house-rich but cash poor is no way to prepare for retirement. Focus on the longer term—if you don’t see yourself living in the house for 10, 20 or 30 years, be realistic. If you think you might want to sell, sell while the market is good. Don’t wait until you’re tapping retirement funds for home maintenance.
Remember: “An ounce of prevention is worth a pound of cure.” When making your estate plan or when probating an estate or administering a trust, do not go it alone. Be sure to engage a Cincinnati estate planning attorney.
For more information about estate planning, probate or trust administration in Cincinnati (and throughout the rest of Southwest Ohio) and to review free resources regarding estate planning, probate or trust administration, visit my website. If you have questions regarding this article or a particular legal matter, feel free to contact me at 513-399-PLAN (7526).
Reference: Money (Aug. 10, 2018) “This is The Single Best Way Divorced Women Can Secure a Successful Retirement”