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As a Divorce Financial Strategist(TM), I see every day how broken marriages impact the financial well-being of women.
Surprisingly, though, there isn’t much research documenting precisely how women fare financially in the years following divorce . . . and that’s precisely why a new study from the University of Connecticut caught my eye.
Kenneth Couch, an economics professor in the College of Liberal Arts and Sciences at UConn, studies the economic effects of unexpected lifecycle events, and he recently investigated the economic costs of divorce on women.
The unusually long-term study, developed in collaboration with the Social Security Administration, covered some 40 years across the lifespan of more than 2,000 women.
In general, Couch found that “family structure matters a lot” for women’s economic well-being.
More specifically, he looked at about 600 women who divorced in the 1970s. Couch found that over the past 40 years, or so, these women lost significant ground with regard to their financial well-being –unless they remarried.
Why? According to Couch, women in the study who did not remarry went back into the job market and stayed there, increasing their personal earnings until they retired. However, after retirement, these women did not receive the extra “boost” of a spouse’s Social Security benefit –and that boost turned out to be significant. The data revealed an average monthly Social Security benefit of about:
- $1,000/month for divorced women
- $2,000/month for divorced women who remarried
- $2,200/month for continuously married women
What do these results tell me?
Of course, the easy answer is this: Staying married can lead to greater economic security.
But, a simple statement like that tells only part of the story.
We know that about half of marriages will end in divorce. And we know that, even in the short-term, divorce hits women particularly hard. (See these recent figures from the U.S. Census Bureau which show that women who divorced in the past 12 months were more likely to receive public assistance, more likely to be in poverty and more likely to have less household income than recently divorced men.)
So, what the results from the UConn study tell me is that every woman needs a solid plan for her economic well-being. Every woman needs to establish financial security before, during and after marriage –even though that process can be extremely challenging.
In many ways, divorce knows no economic boundaries. Even for an affluent woman, divorce can be financially disastrous –or it can be an opportunity to secure a stable financial future. The difference lies in how carefully you analyze your current finances and plan for your future financial well-being.
Because –as I’ve been known to say before –when it comes to divorce, there are no do-overs. You get only one chance to get it right. That’s why women need to proceed with caution. They need to think financially, so that when faced with divorce, they can act wisely to secure a solid financial future for themselves and their families.