Managing Finances After Divorce or Loss of a Spouse

Your financial future may be the last thing on your mind after the loss of a spouse or the end of your marriage. But, taking charge of your money now can help you develop a financially secure future AND renew a sense of confidence.

Economic Realities

The emotional cost of being single again is obvious but the economic cost may not be. If you are divorced it could cost you 25-50% more to maintain your pre-divorce lifestyle.1A single household becomes two, meaning household, health insurance and childcare costs could double.  Unfortunately, there is a gender gap when it comes to the economics of divorce.  A woman’s standard of living following a divorce plummets 27% while a man’s increases by 10%.2

In the case of a spouse’s death, not only is there a loss of income, but also potential future investment growth if any income was being directed into savings. If a spouse was already retired, Social Security, pension or other benefits could decline. Life insurance can soften the blow, but your standard of living over the long run may be at risk.  Like with divorce, there is also a gender gap in losing a spouse.  The average woman’s income declines 20% after the death of a spouse.3

Words to the Wise

These basic financial guidelines can help you make sound choices during this stressful period:

  • Don’t be pressured into quick decisions— Few, if any, major money decisions must be made immediately
  • Assemble a team of good advisors— Besides financial and legal advice, you may need help with accounting, estate-planning and insurance issues
  • Educate yourself— Knowledge is power
  • Get organized— Develop a system for keeping financial records
  • Stick with it— It takes time to make sense of it all, so remain patient
Five Key Steps

Get a good handle on your money with this simple action plan.

  1. Determine where you stand right now:  Calculate how much you have by adding up assets and subtracting liabilities with the “Your Net Worth” worksheet in our Getting Your Financial House in Order brochure.
  2. Review your income and develop a budget:  Make sure your income covers expenses—with some money to save—by filling out the “Your Cash Flow” worksheet in our Getting Your Financial House in Order brochure.
  3. Protect yourself, your family and your property:  Don’t neglect insurance.  Consider life, disability, health, homeowners, auto and, if you’re over 50, long-term care insurance.
  4. Update your estate plan:  Make sure your estate planning is up to date by checking your will, beneficiaries named outside the will, durable power of attorney, advance directives, trusts and letters of instruction.  
  5. Create a strategy for your long-term future: Write down your goals, your time horizons and costs. Make sure retirement is a priority!     

Work with a financial advisor to help you get back on track faster by making sure all money decisions take into account your entire financial picture. Keep in mind that financial advisors do typically charge a fee for their services.

Next Steps
  • Commit to careful decision making and refuse to be pressured
  • Get organized
  • Meet with your financial advisor and get started on the Five Key Steps above

1. The Complete Guide to Protecting Your Financial Security When Getting a Divorce, by Alan Feigenbaum, CFP, and Heather Linton, CFA, CFP, CVA, CDFA.
2. The National Marriage Project at Rutgers University, 2001.
3. WISER Fact Sheet: Widows and Widowhood, Women’s Institute for a Secure Retirement.

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