7 Crucial Reasons Divorced Women Need A Long-Term Financial Plan by Renee Walter
It takes a major life event to trigger a woman over 40 to look seriously at her financial picture—the past, the present and the future. Examples of these life events include going through a divorce, becoming widowed, or having aging parents who need long term care. Realizing the sizable cost can suddenly make you very aware of the importance of long term planning for yourself, so you are not leaving it to your family.
Studies show that when a woman gets divorced, her standard of living is likely to drop (a man’s usually increases.) This is another reason long term care planning is especially important for women in transition. (1)
Here are 7 reasons divorced woman need a long-term financial plan:
1.On average, women have less time in the workforce, so they have less or little retirement savings due to taking time off for children and caring for family. (2)
2. Women earn on average less than men and combined with taking time off to care for their children; this has a negative effect on their careers, savings and earnings. (2)
3. Many women today own their own business, becoming mom entrepreneurs instead of working for someone else or for a corporation in order to have more flexibility and work life balance. Because of this, they may not have access to employee retirement plans such as 401k’s and 403b’s. So they either put off saving for retirement or depend on their spouse or spouse’s advisor to save and manage their retirement. This can be avoided or changed by saving qualified funds in a traditional IRA or SEP IRA yearly and consulting a financial advisor or planner to help.
4. Women are more likely than men to require long-term care, as studies show they live longer than men. One widespread condition is Alzheimer’s disease, which is the leading and most expensive medical diagnosis for long-term care insurance, according to the American Association for Long-Term Care Insurance. Nearly two-thirds of Americans who have Alzheimer’s are women. (1)
5. Going from “couple” to “single” status, you lose your primary healthcare advocate, whether that is someone who provides hands-on care or the person who arranges professional care. Many long-term care insurance policies cover the high cost of professional care managers.
6. Following a divorce, both parties have a smaller pool of assets to fund potential long-term care expenses. Also, a long term-care event can impact the ability of the higher wage earner to meet spousal maintenance and child support commitments. For the lower wage earner, it can create financial hardship, and leave them with limited care options.
7. Lack of long-term care planning may place a massive emotional and financial burden on your children, regardless of your age. Younger kids may be deprived of a caregiver and/or financial support for you. Adult children might have to help with care or funding of care, whether they are ready to or not.
A comprehensive financial plan should include planning for a possible long-term care event, in other words, the chance that you may not be able to live completely independently should you become physically or mentally ill or injured at any time. This care is most often given by two different types of professionals: a home health nurse and a non-medical caregiver. Patients might need just one or both of these types of professionals. Other options include community day care programs, assisted living facilities and nursing homes.
The cost of care can be expensive, ranging from approximately $20 per hour to $20,000 per month depending on the degree of care needed. Medicare only covers the first 100 days. At that point you are financially responsible unless you qualify for Medicaid by spending down your assets, or you have long-term care insurance or a plan to cover the costs. Your options will be far greater if you have a plan in place before you need care. (3)
Women going through these life transitions need to take time to think about their own situation and plan. It’s never too soon or too late to sit down with an advisor and evaluate where you are, clarify your goals and make sure you have everything in order and are on track for a confident retirement you will enjoy for many, many years.
Renee Walter, FSCP® is a Financial Advisor specializing in professional women, business owners, mom entrepreneurs, and tech start-ups.
Renee has over 10 years of experience in insurance and financial services as well as being an entrepreneur involved in the start-up of two businesses. A graduate of Simmons College in Boston, she has lived in the Northbrook/Glenview area for the past 10 years with her husband and two sons. She specializes in helping clients clarify their goals, spot potential problems, identify effective ways to achieve their dreams and protect their family’s financial future.
Renee Walter is a Registered Representative and Investment Adviser Representative of Equity Services, Inc. Securities and investment advisory services are offered solely by Equity Services, Inc., Member FINRA/SIPC, 19 South LaSalle Street, Suite 1300, Chicago IL 60603 (312) 236-2500 Lakeshore Financial Group Inc. is independent of Equity Services, Inc. National Life Group® is a trade name of National Life Insurance Company (NLIC) and its affiliates. Equity Services, Inc. is a Broker/Dealer and Registered Investment Adviser affiliate of NLIC.
Renee is licensed to sell securities in Illinois. She is also insurance-licensed in Illinois, Wisconsin, and Texas. An “endorsement” of Renee is not a referral of her for investment advisory services and may not reflect others’ views or experience.
1 Divorce Financial Analyst Journal Oct-Dec. 2016
2 Now it’s Official: You can’t Blame Women for earning less than men – Guardian September 2016
3 Paying for Senior Care 2016