Think Advisor Article: Many Americans Financially Unprepared for Divorce, Widowhood

In a recent article on Think Advisor, they reported a survey by TD Ameritrade in which they found that a solid percentage of people are unprepared financially for divorce and widowhood.

While some statistic here don’t surprise me, others do. (read full article here)

For example:

87% have confidence in their ability to manage

That seems like a high number to me. What I have found is that one person in the relationship handles the family’s finances when the couple splits responsibilities. When this has gone on for decades, the non-involved person may start to lose confidence in their ability to once again manage finances. It’s important for couples to sit down together, at least once a year, to go over the finances. This is more critical for unexpected widowhood, when the person who handled the finances is no longer around to provide answers.

Divorce derailed 46% of male divorcees’ retirement plans and only 36% for females:

Divorce often leads to a financial setback, primarily due to the cost of divorce and the added cost of two separate households. When done prior to or while one is in their peak earning years, rebuilding can occur. However, divorce later in life with fewer earning years ahead of you or you are already retired, it is very difficult not to be derailed.

Uncertainty as to how to approach end-of-life planning with family members:

The statistics here are alarming. Death is inevitable. We need to have these conversations so that everyone knows what is to be expected before it happens and minds are still rational and calm. When you are in the midst of making emergency-like decisions, this can be stressful on the person left to make the decisions.

If you are interested in learning more about what tax planning opportunities apply to you, please contact us so we can discuss.

Contact me today if you have questions or comments.

Susan A. Moussi, CPA, CFP®, CDFA

SMD Tax & Divorce Financial Planning Consultants, Inc.

Phone: 614.429.4172