Marriage can be a great financial deal for both parties. When it involves 2 incomes supporting one household, it can be a financial boon for the family, allowing them to improve their quality of life, save and invest for the future. But even when it’s one salary supporting 1 household, the division of labor makes it possible for one person to focus on their career while the other focuses on home & family. With employers becoming more and more demanding, the disappearance of the 4o-hour workweek, and business travel becoming more and more compulsory, many couples find it necessary to have one partner at home. More often than not, this role falls on the woman. A recent study published by McKinsey & Company sited the corporate drop out rate of woman to be 43% after children come along. No wonder we’re so under represented in leadership – but that’s another article.
This one is about something that no one is talking about. It’s about what happens to the stay-at-home-mom when her marriage falls apart.
The number one cause of poverty in women over 40 is divorce. And over 87% of the time, the women get custody of the children, so they fall into poverty too. There are many reasons for this, but let’s just start with the big ones.
- Work – It’s hard to re-enter the work force. Many employers do not look favorably at a woman who has been home for a couple of years, never mind 5 or 10. It can be extremely difficult to pick up where you left off and you’re most likely not going to be able to start at the beginning again. Most companies do not want a single mother with obligations when they can have a younger person, who can work late and on weekends, in their entry-level positions.
- Childcare – This is a huge problem for single moms. The courts pressure women to take any job she can get, but if it doesn’t pay enough to cover your living and childcare expenses, than you’re operating at a deficit. They also often do not consider the trauma to the children who are used to having their parents together and their mom at home. They suddenly find themselves being shipped off to daycare and trying to cope with their dad being gone.
- Legal Fees – The financially dependent spouse is still responsible for her own legal fees.Most divorce lawyers require a substantial retainer, anywhere from $3,000 – $10,000, and cost $300-$500 per hour or more. Most divorces take about 2 years, so you can see how quickly your legal fees can spiral out of control and leave you deeply in debt. The more contentious your divorce, the more it’s going to cost.
- Alimony – Most women don’t realize that alimony (aka spousal support) doesn’t really exist anymore. Most states have passed laws that restrict alimony to being “Restorative”, which means you only get it for a short time to help you get back on your own feet. It is also based on “Need” not lifestyle, meaning it will not allow you to maintain your quality of life. Many women find themselves and their children living on less than 30% of their married household income.
- Housing – If you own a home, it’s a marital asset that’s subject to division with all the rest of your assets. This means that whatever equity you have in the home will be divided between you and your spouse. If you do not have the means to buy him out, then chances are the house will be sold. If you do have the means to buy him out, then that’s just the first hurdle. The next thing you will be faced with is how to refinance the mortgage. Not an easy task if you’re not working or making enough money to satisfy the banks. If you can’t keep your house, you are going to be entering the rental market, also not an easy place if you don’t have a job.
- Retirement – If you haven’t been working then you will not be eligible to collect social security when the time comes and chances are you haven’t been paying into a 401K or IRA. The older you are, the more of an issue this is.
While it’s not easy being a working mom, it’s much safer for the long-term financial security of you and your children. Even if you work part-time or in a freelance position, it’s safer than walking away all together.
The divorce rate in the US is over 53% and climbing. So while you think it will never happen to you, it might. The Woman’s Report wants you to know the facts so you can protect yourself. In the meantime, we need to work together to change and pass laws that better protect our stay-at-home moms.