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A few financial considerations for older divorcing women, widows

A recent financial article from CNN addresses an area that is of concern for many divorcing parties, especially those who have been married for decades and are now severing ties as they approach their retirement years.

The topic is the obvious affect that divorce can have on a couple's retirements savings -- that is, the assets that they managed to keep and stash away over many years in contemplation that their investments, home and other savings vehicles would be available for their use as a couple.

Divorce obviously alters that reality, and it can have an especially outsized financial impact on women. In fact, the Government Accountability Office estimates that household income plummets more than 40 percent for women after a divorce, and nearly 40 percent for widows. That number compares to a figure that is less than 25 percent for men under both scenarios.

With that in mind, older divorced women and widows need to proactively be paying attention to a few things that can dramatically brighten their financial pictures.

One of those is a reconsideration of the family home. In short, the house is often overvalued and not looked at objectively. Moreover, its upkeep is often prohibitive for a person living alone. Experts suggest that a divorcing woman might logically push for the lion's share of a spouse's pension plan and/or 401(k) in lieu of keeping the house. Alternatively, a couple might sell the home and split the proceeds. A widow might profitably downsize and investment the extra money she makes in a sale.

Another area to focus on is where to stash retirement money. The mantra "keep it simple" is of paramount relevance to an older divorcing woman or widow, and there are many low-cost target mutual funds to choose from.

Many baby boomer-aged divorced persons remarry, and family law commentators often note that a subsequent marriage often makes execution of a prenuptial agreement relevant.

As one writer notes, "If you remarry, you can keep the money separate, but don't let it be a secret."

Source: CNN Money, "Rebuild your nest egg after divorce or widowhood," Beth Braverman et al, Feb. 18, 2013

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