It broke my heart to talk to Susan about her financial situation. She came to me seeking guidance, but unfortunately her choices were limited. I couldn’t give her the magical answer she wanted to hear. The hard truth is that she made serious financial mistakes in her divorce and throughout her working life. Because of these mistakes, she is now exhausted and cash strapped.


Susan is 65 years old and works 45 hours per week, with no hopes of retiring soon. Why? Because she doesn’t have enough money to live on. She has worked hard for 45 years. Paid her bills on time. Raised her family. Was a devoted wife. How could she be at full retirement age right now, and be able to retire? Where did she go wrong?


The first mistake she made was that during her working years, her and her husband did not save enough for retirement. It’s easy to push off saving for retirement until tomorrow. Until you are less strapped with bills. Until you get a raise. Until the kids are done with college. Until your student loans are paid off. Susan and her husband got swept  away with excuses and never made it a priority to save money for retirement.


The second mistake she made was to not do financial projections on the divorce financial settlement, to see how she would be impacted 1-20 years after the divorce. The easy agreement that seemed fair and favorable at first, ended up being detrimental to Susan. She wanted to stay in the home they had lived in for 25 years, and her ex-husband wanted to keep his pension. The pension would barely be enough to cover his expenses. And they had saved no money in addition to the pension, but rather assumed that it would be enough, along with social security benefits, to sustain them in retirement. Clearly, divorce was never considered in their equation.


The main mistake with this financial settlement for the divorce is that Susan couldn’t afford the house on her own. She only makes $35,000/year, which is not enough to cover the $900/mo mortgage plus all the   expenses required to keep a house running. Like electricity, natural gas, garbage, the Internet, cable, homeowner’s insurance, property taxes, maintenance, yard work, water, and HOA fee. She didn’t think of all those expenses that she would have to pay with half the budget that they had when they were married.


So, while Susan is financially strapped just paying her normal bills, with no hope of retiring, her ex-husband will likely be able to retire comfortably. Because he will get into a house or apartment that he can afford, he will receive his social security check, as well as the pension checks each month.


Seems so unfair, doesn’t it? Nevertheless, Susan agreed to it. On the surface, the divorce settlement seemed fair and favorable.


Learn from Susan’s mistakes. A general rule of thumb is to save 10-15% of your income for retirement. And talk to a certified divorce financial analyst who will help you understand the long-term implications   of the divorce settlement you are considering. They will help make sure that you will be taken care of, and are receiving a fair and equitable property settlement.