With about four in 10 marriages ending in divorce and close to one-quarter of Americans aged 65 and older widowed, a large swath of the U.S. population does not feel financially secure or prepared for retirement. What's more, according to a new TD Ameritrade survey of 2,000 adults aged 37 and older, a big number of married Americans don't consider the chance of a divorce or the death of a spouse when financial planning, which can create hardships when they do reach their golden years. According to the Omaha, Nebraska-based discount brokerage, there are 25 million divorcees and 14.5 million widows/widowers in the U.S.
"Advance planning could provide a much-needed boost in financial security for those who unexpectedly end up alone at any phase of their lives," said David Lynch, managing director and head of branches for TD Ameritrade Holding Corporation (AMTD), in a press release highlighting the results of the survey. "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."
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According to the survey, two-thirds of married individuals said they don't have a financial plan that takes divorce or the death of a spouse into account. Despite the lack of a plan, many of the men and women surveyed think they would be able to manage their finances if something happened to their spouse or they got divorced. Among survey respondents, 72% of men and 62% of women signaled their confidence. Of the married people polled, 43% said they feel financially secure.
But when the same question was posed to divorced people, the answer was starkly different. TD Ameritrade found that just one-quarter of divorcees feel the same, with 47% saying that they are not saving or investing any of their take-home pay each month, which compares with 32% of their married peers. While 41% of divorcees expect to fully retire compared with 47% of married Americans, only three in 10 divorced Americans expect to be very financially secure in their retirement compared with 52% of married people. One of the top concerns for divorced people is running out of money.
Widows and widowers are less concerned, with 39% saying they feel financially secure and 42% expecting to be financially secure in retirement. Of the widowed survey respondents, 67% said that they are not investing and saving any take-home pay during an average month, which is higher than their divorced counterparts. "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 said in the report. "Married people of all ages should take steps now to ensure they are involved in both big and small family financial matters. They should understand their household assets and liabilities, and ideally, consider establishing multiple income streams that would help them better control their financial futures."