The tide has shifted in the workforce, and more and more women are taking on high-level career positions. Today, women are the top income earners in one-third of all marriages.
With an average of 50% of marriages ending in divorce, this shift has resulted in another tide change. A new and growing trend has emerged where women are paying alimony and/or child support to their ex-husbands. Equal rights means that alimony may be called for when the wife is the primary breadwinner in the home.
56% of divorce lawyers across the United States have seen an increase in mothers paying child support in the last three years, and 47% have noted a hike in the number of women paying alimony; this statistic according to the American Academy of Matrimonial Lawyers.
When one spouse makes more than the other, alimony is a means to equalize the lifestyle of each spouse upon dissolution of the marriage. Originally intended to protect the spouse who was not the career-driven force in the household (traditionally the female), alimony is now equalizing spouses when the woman is simply more successful than her husband.
What does this mean for women whose careers are on the rise? While planning for a divorce is counter-intuitive to nurturing a happy marriage, understanding what your increase in salary can mean in all situations – from taxes to retirement – is important for prudent financial planning. Planning should begin when first considering co-mingling assets.
For a couple where one or both parties have already acquired substantial assets, a prenuptial agreement can be a good tool to help avoid unpleasantness later down the road. Consulting a financial advisor and an attorney before marriage can be helpful in understanding what is important to include in a prenuptial agreement (without making this agreement one that fuels the first serious disagreement). Creating a professional balance sheet and financial inventory upfront also paves the way to constructive discussions, making sure that both husband and wife know what assets and liabilities are in place at the start. This can help both parties set shared financial goals for the future.
Establishing good communication about finances in your marriage is likely one of the best tools to avoiding difficulties about money now- and later. Setting joint goals, and checking in with your financial advisor regularly to track your progress, is also a very good idea to maintain a healthy financial relationship.
So go ahead and take that promotion, climb that corporate ladder, but be sure to check back with your financial plan – and financial planner – about how to avoid risks in your future as a result of increased earnings.
Securities offered through Cadaret, Grant & Co. Inc. Member FINRA/SIPC. Davis Financial and Cadaret, Grant are separate entities.