Getting The Best Settlement, The Professional Woman Getting Divorced
So, you took time off for many years while raising kids and you have a professional degree. Believe it or not your degree, or “earning potential”, can be used against you. I realized this when I went through my own divorce. While it’s possible for you to make up ground at some point professionally and financially, studies show going part-time or staying home full time has lasting financial consequences. Below are 5 things I found were overlooked by my own veteran divorce attorney. Hopefully, this will arm you with the knowledge to better negotiate your settlement:
1) In his 2018 book entitled,“Timing”, Daniel Pink shows us that graduates entering the job market during a recession can take up to decades longer to make the same salary as their similarly educated counterparts who entered the workforce during an economic boom when salaries are highest. One could argue, and should, that a similar drag on income potential and professional achievements befall the professional woman who stays home with children. Finding salary ranges for those with a similar degree, who never left the workforce, should be used in the negotiation of alimony and child support. The fact that you will make far less and be more prone to being laid off is something you should remind all parties to the negotiation. You have likely made personal sacrifices that will stay with you for years to come and the mere fact that you have “earning potential” is exactly that. Potential. Until those wages are banked, you are no better for your hard earned degree/s.
2) You were the one who was there when the kids were sick. Will this expectation carry forward post-divorce? For many working Moms, it does. You need to monetize the missed work when your kids are sick post-divorce and you have to stay home. Will you miss deadlines? Need to cancel important trips? Delay accepting that promotion because you accept more childcare responsibilities? All of these situations represent missed opportunities for you to advance in your career and potentially get pay raises.
3) Will you have less vacation when you go back to work or go full-time? You might have to consider taking unpaid holidays. If so, how many days of missed pay could this represent?
4) If you worked, are you vested in your employer-sponsored retirement plan? Vesting is the time frame in which you are entitled to 100% of the match or profit sharing contributed by your employer. Be sure to discount your retirement account balance to the vested amounts. This can represent a lot of money you might have to forfeit if you get laid off.
5) Could there be job re-training or certifications you need to get you ready to go back to work? How much do these cost? Will you need additional child care while you are retraining?
What I found during my divorce, was a conventional acceptance by both attorneys to simply split assets down the middle and attempt to close the income gap if one person made more than the other. What I found after the fact is that negotiations in divorce are like business negotiations. Arming yourself with knowledge of how your future earning potential has been affected by the sacrifices you made during your marriage is important to have your side of the finances appropriately determined. Simply looking at the family balance sheet and income statement and calling it a day will not get you the money you deserve. Hopefully, your attorney will bring these things up in the negotiation discussions and argue for a settlement that reflects your true financial reality. If they don’t, you should!
Author, Amanda Foster, CFP(r), CRPS(r)
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