What is the divorce gap? It’s the income inequality between spouses during the divorce process. Before, during, and after divorce, women end up worse financially. Here are a few key stats:
- As The Atlantic writes, the main reason women suffer the brunt of divorce’s financial burdens is that during marriage, they are more likely than men to stop working in order to raise kids.
- Divorce can cost anywhere from $8,500 to $100,000, which many women cannot afford.
- Ellevest reports that women’s household income falls 41 percent after a divorce — which is more than twice as much as men’s. Women’s credit scores fall more, too.
- Primary-caregiving moms end up with more expenses and less earning power, Ellevest writes.
- Women tend to find more financial “surprises” during divorce that they weren’t aware of during the marriage, like high mortgage interest rates on the house, the size of their investment portfolio, or secret accounts.
- According to a 2017 TD Ameritrade survey, 36 percent of divorced men said they felt financially secure versus 19 percent of divorced women.
Divorce and COVID-19
Many are predicting that there will be a surge in divorces after the COVID-19 crisis is over. (As The New York Times writes, with the unemployment rate at 10.2 percent, the U.S. entering a recession, and working moms adding “part-time teacher” to their list of child-rearing duties, circumstances have been ripe for relationships ending.)
In an Ipsos poll, nearly one in ten married or partnered people said they are likely to separate from their spouse/partner, partly due to issues related to the pandemic.
How We Can Fix Divorce Inequality?
What steps can we take so our finances are not drastically hurt from divorce? At The Humphreys Group, we always talk about the importance of women owning their financial power. One study found that 56 percent of women deferred to their spouse on investment decisions and financial planning. We need to be fully involved in money decisions, have open, honest conversations about finances, and have our own savings.
Divorce is an emotionally and financially difficult experience, and COVID-19 has made it even more so. Contact The Humphreys Group team if you’d like to continue the conversation about financial planning and owning your financial journey.