How women can protect their retirement after a divorce

Divorce is one of the most challenging experiences a person can go through. 

Along with the emotional struggles, it also creates substantial financial hurdles. Divorced women experience a wealth gap of about 86 cents to every dollar a man earns.1 With that in mind, it’s critical that they receive a fair and equitable settlement.

How can women protect their retirement and larger financial future after a divorce? I provide a few key steps and considerations below.

Know What Assets You Have

To start, it’s essential to understand what assets you own after your divorce, what your spouse owns, and what’s considered marital property.

Certain assets, such as an inheritance or home from a previous marriage, may belong to your spouse before, during, and after the marriage. Other things you acquired together, like a vacation home or investment accounts, are considered marital or joint property because you acquired them during the marriage.

If you haven’t yet, start a list of what each account is, its current value, and projected tax implications. Make a note of whether the asset is considered yours or is marital property. Wherever possible and legally allowed, transfer accounts and insurances into your name so you can keep your assets protected.

Before transferring money out of certain joint assets, such as checking and savings accounts, remember to consult your family law (divorce) attorney. You need to go about the transfer process in a way that does not conflict with any legal agreements or ongoing negotiations.

Consider Illiquid Assets

Keep in mind that you may be awarded accounts with illiquid assets, such as certain investments. In some cases, you can not access those funds immediately. This can be incredibly frustrating for divorcees, as the transition after a separation is often financially challenging.

Understand How Divorce Impacts Common Retirement Vehicles

You and your spouse likely established retirement savings accounts such as IRAs, 401(k)s, 403(b)s, etc. If those accounts are to be split or transferred during a divorce, you should do it in a way that avoids early withdrawal taxes and penalties.

For ERISA accounts like 401(k)s or 403(b)s, you must get a Qualified Domestic Relations Order (QDRO). A QDRO gives you a transfer plan for retirement assets, enabling you to split them up without the early withdrawal penalty. IRAs do not require a QDRO, as the divorce agreement will specify how to divide them. 

You and your financial advisor should review the rules of each account carefully, as some may request more documentation than others. A Thrift Savings Plan, for example, requires a divorce decree instead of a QDRO.

Pension Plans and Divorce

Dividing a pension plan is complex and has many potential outcomes.

If you or your spouse earned the pension while still married, it’s considered marital or joint property. In this case, the benefits are likely divided up between spouses. If the pension belonged to your ex-spouse, you might opt to retain the survivor’s benefit. 

Or, you may forfeit or transfer the survivor benefit and receive a portion of the monthly benefit. In some cases, you may be able to retain both the survivor benefit and a portion of the monthly benefit.

Another option is to waive the rights to your survivor benefits and have your ex-spouse name you the beneficiary of a life insurance policy instead. This move is advantageous if you remarry, as a new marriage may mean forfeiting your ex-spouse’s survivor benefits.

Again, this is a complicated subject. If you or your ex-spouse have a pension plan, feel free to reach out. I’d be happy to take a look at the plan and provide a more accurate assessment of your potential options.

Consider After-Tax Dollars

Make sure you consider the after-tax value of the accounts awarded in a divorce. Say you have $25,000 in a Roth IRA and $25,000 in a traditional IRA. 

The dollars in that traditional IRA are actually worth less because the withdrawals will be taxed. By comparison, Roth IRA withdrawals are tax-free, meaning the account’s true value is $25,000. 

When splitting assets, make sure you account for the after-tax value.

Get Clear On Your Debt

Once you have a clearer picture of your assets, it’s time to review your current debt. This could include:

  • Credit card debt
  • Personal loans
  • 401(k) loans
  • Mortgages

Knowing how much you owe is important for establishing who is responsible for what.

Don’t forget to cancel any joint credit cards your ex-spouse is on. If they rack up credit card debt and don’t pay for it, you may still be liable, and your credit score could be affected.

Make a New Cash-Flow Plan

No matter what, your cash flow situation post-divorce will look different. To compensate, consider making some changes like:

  • Going back to work
  • Altering your investment strategy
  • Spending less on splurges

You and I can work on a cash flow plan together that best accommodates your new financial situation. Downsizing and accounting for new expenses is challenging, but I’m here to support you through this transition.

Update Your Estate Plan

It may not be first on your to-do list, but don’t forget to update your estate plan post-divorce. You likely listed your ex-spouse as beneficiary or trustee on several accounts, including retirement savings, life insurance, savings accounts, etc.

Even if you’re no longer married, neglecting to change the beneficiary on these assets means they will still receive them after your passing.

Accept Help From Those Who Care

Divorce is a challenging process. It’s good to accept help from your family, friends, loved ones, and trusted professionals so you can navigate the process with support.

If you’re experiencing divorce, I’m here to lend a helping hand. Reach out anytime, and I’d be happy to discuss the next steps or answer any questions you may have.


  1.  Gender wealth gap: families headed by women have lower wealth