By Mary Helen Gillespie
“Sheryl,” 65, from Virginia, a mother of four, says she will never be able to retire because her divorce has left her living paycheck to paycheck for decades, and she has to more thousands of dollars in alimony.
What was the financial impact of your divorce on your retirement plans?
I can’t really retire. I will always need to have extra income either through part-time work or through the sale of porcelain that I paint and/or other artistic mediums.
Did you hire a financial advisor, CPA or other financial professional to help you plan for your retirement needs during the divorce process? Would you do it today?
My ex was/is a financial advisor, CPA and life insurance broker. Yes, I would but I wouldn’t trust my ex.
Was your divorce lawyer concerned about your retirement finances? Was the divorce judge?
Not then, but these issues weren’t really a concern until:
- My ex sold his client list and started working as an independent contractor to avoid child support based on his income.
- I found out that our marital home was in the second month of foreclosure and he never told me. I was only in my second year as a real estate agent, but was able to sell the house quickly at an open house – we were in an area that was/is very desirable.
- The net profit on the sale of the house should have been $90,000. But my ex had taken a second trust on our house and had forged my name on the paperwork.
- He took one of the debt repayment checks (another I was unaware of) and changed the payee to “Household of XXXX XXXXXXXX rather than “Household Finances”.
- Even though the lawyer told the settlement company to send him the final check and his office would cut each of us off the agreed amount, he took the check and forged my name on it and deposited it into the account of his then-broker (a huge SEC violation). He was never punished for these actions.
Throughout our nearly 14 year marriage, all funds from my employment IRA(s) and other investments were given to him to invest for us. Everything was spent on other women. Due to his blatant disregard for child support and the loss of our home in Vienna, Virginia, I had to move to an affordable county, pull our children from some of the best public schools (at the time) of Virginia and uproot them from their homes and friends. My children were then 2 and a half, 9, 11 and 17 years old.
How would you describe the quality of your financial life after divorce?
Paycheck to paycheck, especially when I still had three of the four minor children to support. He still owes nearly $17,000 and stopped paying in 2013 when our youngest turned 18. I worked full time throughout our marriage with a year off when each of our three youngest children was born.
Throughout the marriage, “Next year, honey” was the mantra for when I could finish my last two years of college – it never happened. Finally, in 2018, I graduated – which added $19,000 in debt to my already tight budget. My 14 year old car died in 2019 and for the first time since I was 20 I also got a car payment. National Health Care increased my monthly medical insurance payment from $95 to over $100, and now Medicare has increased it to $170.10.
I was thinking of going to the state to start collecting overdue child support (a debt that doesn’t have a deadline). My ex sent me two really ugly letters with accusations and threats – he’s narcissistic and bullying – and yes, he still has the power to scare me. So there’s the lesson, ladies – hire professional help, unrelated to you or your ex, to secure court-ordered, enforceable, long-term financial arrangements. My ex now earns close to $100,000 a year; it’s something he held back until our youngest was 18.
I’m a museum director in a small rural town and I earn a whopping $34,000. I have $4,000 in the last “retirement” account I created. My social security will be about the same as my current income – therefore I will never be able to retire.
What other information would you like to share with women in similar situations?
- Even if things are amicable, put everything in writing with the signature of a neutral witness.
- Do not waive your right to support.
- If you’ve been married long enough under federal and state law, get a legally enforceable order to collect your pension and verify your Social Security entitlements.
- Immediately put in place a court-approved and ordered financial agreement.
- If you have minor children, go through the appropriate state office for child support enforcement, but be aware that your ex can game the system for a long time and avoid full payments.
- NEVER trust your ex to handle the financial arrangements himself – always do things the legal way so they are enforceable.
It’s hard: you count!
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Retirement Daily shared “Sheryl’s” story with Allison A. Alexander, CFP®, CPA, CDFA®, financial advisor and member-owner of Savant Wealth Management of Rockford, Illinois. Here are her thoughts for “Sheryl” and other women facing the same issues.
“Sheryl” may be able to get redress, but that will likely require legal action and litigation.
representation can be expensive. Women facing similar challenges should contact their state bar association and explore legal aid/pro bono family law attorneys for additional options.
This caught my eye: “My ex was/is a financial advisor, CPA and life insurance broker.” If what “Sheryl” says about how he handled the couple’s finances is true, it might be a good idea to do a background check on her ex-husband using publicly available records. A free report can be viewed here: https://brokercheck.finra.org/ This may be of interest to a judge revisiting the “Sheryl” case.
I would have recommended that she do a credit report during the divorce process. This would have identified the second mortgages and they could have been processed prior to settlement.
I now recommend that he go to the social security office as soon as possible. With a 14-year marriage, she may qualify for half of her former spouse’s benefits or 100% of hers, whichever is greater. She should also explore Medicare assistance programs. Depending on her income, she may be able to reduce/waive her premiums: https://www.medicare.gov/basics/costs/help.
Finally, she should practice self-care. She needs to stay healthy to work and reduce her health expenses.
To boost her post-divorce income, “Sheryl” could develop a side hustle to generate income, preferably something online with little overhead. If she’s healthy, she could walk the dogs or buy groceries for others. If she lives in her own home, she might consider renting rooms from friends or fully vetted strangers. This could reduce personal expenses.
It looks like the youngest child may be 27 and the eldest is 42 now. She could consider moving in with one of the children and being a paid caregiver.
If she wants to keep working for as long as possible, even taking on a second job, she should consider doing something she enjoys. With her artistic background, her skills could be useful in a framing shop/gallery.
One piece of advice I always give to my divorcing clients, regardless of wealth, is that even if it’s amicable, the divorce process is uncomfortable. Don’t rush and rush the process. You make short-term decisions that will impact your long-term financial security. Legal fees are expensive, but making bad financial decisions can be even more costly.
Divorce can be disruptive and sometimes traumatic. Recovery is a process, not something that happens overnight. If possible, give yourself some time off after the divorce before making major financial decisions.
Work with an advisor to invest your settlement. Investing can be a new and unfamiliar world. A newly divorced client may need to explore their risk tolerance and comfort level with volatility before choosing a portfolio. Retirement projections can provide clarity on how much a person can spend without worry, giving them peace of mind.
Advice I would give to EVERYONE, whether they are getting divorced or not: Don’t give control of your financial situation to another person. Your financial security is your own responsibility. If your partner volunteers to be responsible for investments and tax planning, that’s fine, but be sure to hold quarterly meetings to review all of your assets and liabilities. Make financial decisions together and recognize that it is your responsibility.
Learn more by watching our webinar, Round table on retirement: women, divorce and retirement, with Robert Powell and panelists Michelle Petrowski and Bonnie Sewell.
To find a financial professional with divorce experience, visit Divorce Financial Analysts Institute website.
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