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Financial Planning for Women During a Divorce

Financial Planning for Women During a Divorce

February 21, 2024

Divorce is painful, and for women considering one or going through one, it’s common to feel alone, worried, and confused—especially about your financial future. A divorce can greatly impact your finances, often in unexpected ways. Financial planning can play a key role in helping you through this stressful transition. 

After a divorce, women may suffer additional financial strain from caring for children, maintaining a home, and preparing for retirement. Women over 50 who divorce typically experience a 45% decrease in their standard of living, while men’s standard drops just 21%. Here is what women need to know about financial planning during a divorce.

Understanding Your Financial Situation

One of the best ways to get a comprehensive look at your family’s financial picture is by gathering the right documents. Before you start your financial planning, have documents like these handy:

  • Bank statements
  • Tax returns
  • Investment accounts
  • Retirement accounts
  • Insurance policies
  • Trusts and other estate documents

While it may seem tedious, pulling together documents is an important step in helping you care for yourself and your children. 

Budgeting and Expenses

The financial realities of divorce compound an already difficult situation. You can help yourself by acknowledging you have one income now instead of two to cover housing, electricity, water, and more. You may need to adjust your lifestyle and reassess your spending, and then develop a post-divorce budget that fits your new life.

Evaluating Assets

Once you have all the records of property, investments, retirement accounts, and any other assets, review your records to find out what your share of those assets might be. A financial advisor, such as Paragon Wealth Management, can help you evaluate your marital assets. Contact us today to learn more.

Managing Debt

Your divorce doesn’t change the agreements you made with lenders while you were married. So, review all joint accounts you have and consider canceling them.

Open a new bank account in your name only, have your paycheck go to that account, set up payments for your debts from that account, and establish a low-limit credit card in your name.

You can refinance the mortgage after the divorce to have the house placed in your name if you get the house. Alternatively, you could sell the house while married and determine through the settlement how you divide the proceeds. 

Reviewing Insurance

You may also want to review your health, life, home, and auto insurance. You want to know you have the coverage you and your family need and to update your beneficiaries.

Investing and Planning for Retirement

If you have joint investment and retirement accounts, hold off on liquidating the assets, which could possibly incur taxes and penalties. It depends on the type of account, but often a letter to a brokerage can help you get an investment account split to your wishes. 

You may need to provide a divorce decree to divide an individual retirement account (IRA). The 401(k) administrator may require a Qualified Domestic Relations Order (QDRO) from the courts to divide assets and might require the non-plan spouse to open an IRA to roll over proceeds or take a penalty-free distribution.

You might also want to verify your eligibility for Social Security benefits and any pensions from old employers that are often forgotten.

Updating Your Estate Plan

Just as with beneficiaries to insurance, you should update any trust or other estate planning documents to remove your ex-spouse.

Building a Support Team

Going through a divorce is stressful. The important thing is to know you’re not alone. Lean on friends and family members you can count on. Your team also should include a professional counselor and an attorney. Financial planning is critical, so include a professional financial advisor on your team as well.

Finding a Financial Planning Advisor

When you take steps like managing your debt and evaluating your assets, you can better shield your financial future during a divorce—and seeking professional, personalized guidance can help you make it happen.

Paragon Wealth Management takes the time to explain what you need to know to serve your best interests. To schedule a meeting, call (215) 348-3176 or email charlie@paragon-wealth.com.

About Charles

Charles McNamara, III (Charlie), is Founder, Financial Advisor, and President at Paragon Wealth Management, a financial services firm based in Doylestown, Pennsylvania, dedicated to professionally supporting, educating, and providing informed direction to each and every client. Charlie’s passion for working with clients one-on-one to find specialized solutions to pursue their financial goals drives the firm’s client-focused mission and continued success. He values the confidence clients have in him to always keep their best interests in mind.

A veteran of the financial services industry since 2000, Charlie brings an extraordinary level of knowledge and experience to the financial field. After obtaining a business finance degree from Delaware Valley University, he began his career as a financial advisor with Prudential Financial in 2001, and was promoted to management in only three years due to his hard work and dedication. With an entrepreneurial spirit and a passion for helping people solve problems, he launched his own practice in 2007.

When he’s not at work, Charlie spends time with his wife, Lisa (co-owner of local salon Moxie), daughter, Carissa, and their two dogs and cat. He enjoys weightlifting, running, golfing, fishing, and giving back to the community through his church, Our Lady of Mt. Carmel, and local organizations, such as the Travis Manion Foundation. To learn more about Charles, connect with him on LinkedIn.