The Pew Charitable Trust recently published the results of its Economic Mobility Project (EMP) study. The study‘s findings of women‘s economic situation after divorce were interesting and encouraging. According to Pew, women today are more likely to come out of a divorce as financial winners than they were in the past.
The study was based on non-partisan data and was intended to spawn a discussion about individuals‘ ability to move up or down the economic ladder, as well as how government and private organizations can offer better economic opportunities to encourage upward mobility. Part of the study focused on the impact of divorce based on gender.
The EMP results show that 20% of divorced women‘s income will increase by 25% or higher after divorce, which is almost double the increase of only 11% in the early/mid 1970s. In contrast, only 16% of divorced men‘s income will increase by 25% or higher after divorce. This figure is also up from 14% in the early/mid 1970s. On the other hand, around 50% of both women and men are financially worse off after a divorce.
Commentators assert that these figures reflect a broad change in women‘s financial position and strength, for which there are several factors. One important reason is that the wage gap between men and women is closing. Women are also getting better education than women in the 1970s, which is leading to better, higher-paying jobs. Another factor is that women are more informed than ever of their marital assets. In the past, many women were unaware of their marital income, debt, and property. In contrast, women today have become more involved in family finances, thereby strengthening their position during divorce.
Family law attorneys have also reportedly seen a large percentage of women seeking prenuptial agreements. This was rarely the case 30 years ago. Today, women are getting a better education, better jobs, are waiting longer to get married and, thus, are accumulating more personal assets prior to marriage. Taking their cue from men, these women have sought better ways to protect their own wealth, with many turning to the prenuptial agreement.
The study also raises the question of what married couples can do to ensure that they do not suffer as much economic damage in the event of a divorce. Even though planning for a divorce while happily married may not be fun or seem necessary, it may end up meaning the difference between financial success and economic crisis in the future.
- Know the law in your state. New Mexico is a community property state. In New Mexico, any income, property, or debt accumulated during the marriage is generally divided equally among the spouses upon divorce.
- Be aware of marital income and property. Even though in many situations one spouse is often the sole or majority income-producer, it is important for both spouses to know the value and nature of family income and investments.
- Keep an eye on debt. Marital debt is an important topic in New Mexico. In New Mexico community debt is usually divided equally upon divorce. This may be true even if only one spouse acquired the debt, only one spouse has an income, or the other spouse was unaware of the debt. Therefore, in community property states like New Mexico, it is even more important for both spouses to be aware of all debts accumulated during the marriage.
- Establish credit. Many spouses, for several reasons, do not have a credit card in their name. When faced with divorce, some individuals find that they have not established sufficient credit to accomplish even the simplest tasks like obtaining a telephone line or renting a home. Even though divorce may not seem like a possibility, it is important for both spouses to have a personal credit card and to establish a credit history.
Although studies like EMP show that women are doing far better after divorce than they were 30 years ago, it is important to realize that women are faring better because they have taken steps to protect themselves and their assets in the event of divorce. Nobody goes into marriage thinking that they will ultimately separate. However, a little common sense planning now can go a long way in the future. And if divorce is unavoidable, women and men alike would do well to seek the advice of an experienced divorce attorney.