Earlier this year, Congresswoman Carolyn Maloney of the U.S. Joint Economic Committee released a stunning report about the gender pay gap and the long-term effects it can have on women. It also addressed how lesser pay over a long term slashes the retirement prospects for women, an effect that has drastic implications for divorcing women.
According to the report, over the course of a woman’s career, she can expect to make a little over $10,000 less than a man in the same role per year. Over a lifetime, that amount can reach a staggering half million. Not just that, but the report noted that women tend to leave jobs more frequently than men, making them less able to set up pensions (33 percent of women have pensions, compared to 55 percent of men). Women also generally have lower salaries.
Not only that, but because women often bear the brunt of taking care of the immediate needs of their families, they often invest less in their retirement accounts than men do. As a result, women often have less money than men during retirement ”“ and if divorce happens, this can be detrimental to womens’ prospects for the futures.
The Effect of Divorce on Women and Retirement
Because women are less able to plan for retirement than men, in addition to the expenses of filing for divorce, attorney fees and the disputes that go on during property division, divorcing women are typically disadvantaged in divorce. In fact, divorced women actually have some of the highest poverty levels among women ”“ even widows are generally at less risk of poverty than divorcing women. Only women who never marry have worse poverty levels.
So, how can women prepare for retirement and divorce in light of the overwhelming pressures they face? Women should be aware of how their divorce settlements will affect retirement accounts for both themselves and their spouses. Consider the future values of assets during the process of marital asset division, not just the current values. Many divorcing couples are interested in the here and now ”“ who gets the house, who gets the cars, who gets the boats. But often, retirement accounts (due to their tax-free growth) are much more valuable in the long term than other property. Trading some assets away during the divorce may be a worthwhile exchange for a portion of a spouse’s retirement fund.
Our Denver family law firm can assist your family in property division to ensure that both parties receive an equitable, future-proof portion of your marital assets.