You should be financially prepared for everything. Even the things you never thought would happen.
We don’t like to think about losing a loved one, but the fact remains that couples aren’t ready to handle the costs of divorce or the death of a spouse. TD Ameritrade says two-thirds of couples don’t have a plan in case either of those things happens (at least one of them is guaranteed), and most men and women believe they’re financially ready to handle either scenario.
Talking about money in marriage is still widely taboo, even though younger couples are making it an important topic to talk about constantly. But many couples go through their relationship without ever discussing what ifs.
“Advance planning could provide a much-needed boost in financial security for those who unexpectedly end up alone at any phase of their lives,” says David Lynch, managing director for TD Ameritrade. “Considering divorce or the loss of a spouse is a smart addition to any long-term financial plan. It’s no different than planning for things like a major illness, disability or potential long-term care needs.”
TD Ameritrade says that only 1-in-4 divorced people feel financially secure, compared to married couples, who feel fine at twice the rate. Those divorced people were once married and probably felt fine about their finances at some point, too.
This isn’t just a short-term impact; divorcees and widows feel the impact of losing a spouse for a long time after it happens. More than half of married people in the survey expect to feel financially secure in retirement, while only 30 percent of divorced people expect the same. Nearly half of divorcees fear running out of money before they die (compared to 38 percent of married people).
When it comes to losing a spouse to death, two-thirds of widows say they aren’t saving enough money for retirement or investing. Overall, widows and widowers are more positive about their finances than their divorced peers, but they are still uncertain about where their money will come from later in life if they can’t work.
“On average, women may outlive their husbands by five years or more. And though the average age for becoming widowed is 59, it can happen at any time in your married life,” Lynch says. “They should understand their household assets and liabilities, and ideally, consider establishing multiple income streams that would help them better control their financial futures.”
In more recent years, income and finances have become a focal point for prospective couples. Last year, a survey found that most single people believe a good credit score is one of the most important parts of a potential partner. Three-in-four women and almost two-thirds of men think a financially responsible partner is really important.
Learning about how a person spends and saves their money can help or hinder your entire future. As the conversations around money grow both before and during relationships, couples (and potential couples) can work toward being financially secure in any situation they may face, both hypothetical or otherwise.
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