planning trends

The Financial Impact of Divorce on Retirement

Women More Likely Than Men to Take Positive Financial Steps Post-Divorce

New research from the Association of International Certified Professional Accountants (AICPA). Reprinted with permission. Visit AICPA.

NEW YORK, February 13, 2017 – Most happy couples don’t spend time thinking about what their life would look like in the event of a divorce.

However unromantic the idea of discussing a retirement plan with your significant other may be, it’s crucial that both individuals in a marriage have a working knowledge of the family finances – just in case.

In fact, three-in-four (75.6 percent) retirement age divorcees need a better understanding of how to manage their personal finances, according to a new Personal Financial Planning (PFP) Trends Survey of CPA financial planners from the AICPA.

And as the divorce rate for Americans over the age of 50 has doubled since 1990, an increasing number of Americans near retirement age will find themselves scrambling to solidify their finances as they approach their golden years.

As marriages sour and couples divorce, there are stark differences in how men and women approach their finances as they prepare for retirement. The survey found they were equally as likely to experience a deterioration of their spending habits post-divorce (women: 25.7 percent, men: 24.9 percent), but the similarities ended there.

Positive Post-Divorce Behaviors

CPA financial planners say their female clients are far more likely to adopt positive financial behaviors post-divorce than their male clients. In fact, women are twice as likely to seek out a job (40.2 percent to 20.6 percent) and increase their savings toward retirement (41.3 to 16.4 percent). Women were found to be almost four times more likely than men to improve their spending habits (42.3 percent to 11.7 percent) and roughly fourteen times more likely than men to actively seek out financial advice after divorce (60.4 percent to 4.4 percent).

“When couples get divorced later in life, there is often one partner in the relationship who handled all of the finances – in my experience, it’s usually the husband particularly in Boomer-age couples. In many instances, this leads to one person in the relationship not having an accurate picture of the family finances, including their retirement savings,” said Tracy Stewart, CPA/PFS, member of the AICPA’s Personal Financial Planning Executive Committee. “It is essential that couples who get divorced later in life take a long view when dividing assets and making financial decisions.”

The survey also asked CPA financial planners what steps would have better prepared their clients near retirement age financially for divorce. The most frequently cited were understanding how to manage personal finances (75.6 percent), understanding the long-term financial planning consequences of a divorce settlement (73.0 percent) and understanding the tax implications of a divorce settlement (56.9 percent).

“When happily married couples are making financial decisions, they very rarely consider what would happen in the event they divorce. The unfortunate truth is that the process of dividing assets is a lot more complicated than saving and investing. The good news is that CPA financial planners have a strong foundation in tax planning and can help ensure that a divorce is settled in as tax-efficient a way as possible,” said Stewart. “Divorce is a complex financial event that often means calculating spousal support or child support, making sense of pensions and investments, and deciding what to do with the house. Until both parties understand exactly what they have, they can’t realistically make a financial plan for the future.”

A Constructive Pre-nup?

The unfortunate truth is that the process of dividing assets is a lot more complicated than saving and investing.

The additional steps CPA financial planners felt would have better prepared their clients for divorce were updating wills or trusts (51.2 percent), increasing saving for retirement (50.7 percent) and decreasing spending (42.8 percent), reflecting the importance of keeping documents accurate and up to date and building up savings before assets are split – good advice for couples at any stage of their marriage. Interestingly, roughly one in three planners (36.1 percent) cited establishing a pre-nuptial agreement as a step that would better prepare their clients financially for divorce.

Regardless of if a couple is recently married or together for years, Stewart urges that both parties establish open and regular communication about their financial life and plans for retirement and work to get on the same page about their approach to saving and spending.

To speak with a CPA financial planner about the survey results, contact James Schiavone at 212-596-6119, or Jon Lynch at 212-596-6033,




The AICPA’s PFP Trends Survey is administered as an online survey to CPAs who are members of the AICPA Personal Financial Planning Section, including those holding the CPA/PFS credential.
About the AICPA’s PFP Division
The AICPA’s Personal Financial Planning (PFP) Section is the premier provider of information, tools, advocacy, and guidance for CPAs who specialize in providing estate, tax, retirement, risk management, and investment planning advice to individuals, families, and business owners. The primary objective of the PFP Section is to support its members by providing resources that enable them to perform valuable PFP services in the highest professional manner.
CPA financial planners are held to the highest ethical standards and are uniquely able to integrate their extensive knowledge of tax and business planning with all areas of personal financial planning to provide objective and comprehensive guidance for their clients. The AICPA offers the Personal Financial Specialist (PFS) credential exclusively to CPAs who have demonstrated their expertise in personal financial planning through testing, experience and learning, enabling them to gain competence and confidence in PFP disciplines.
About the American Institute of CPAs
The American Institute of CPAs (AICPA) is the world’s largest member association representing the CPA profession, with more than 418,000 members in 143 countries, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting. The AICPA sets ethical standards for the profession and U.S. auditing standards for private companies, nonprofit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, builds the pipeline of future talent and drives professional competency development to advance the vitality, relevance and quality of the profession.
About the Association of International Certified Professional Accountants
The Association of International Certified Professional Accountants (the Association) combines the strengths of the American Institute of CPAs (AICPA) and The Chartered Institute of Management Accountants (CIMA) to power opportunity, trust and prosperity for people, businesses and economies worldwide. It represents 650,000 members and students in public and management accounting and advocates for the public interest and business sustainability on current and emerging issues. With broad reach, rigor and resources, the Association advances the reputation, employability and quality of CPAs, CGMAs and accounting and finance professionals globally.