In Victorian times, polite society shunned divorced women, often forcing them to spend their later years alone. Today, some divorced women suffer a different fate. Among low-income retirees, they are the poorest of the poor.
According to federal statistics, 22% of divorced female retirees live in poverty vs. 18% of widows and 20% of women who never married. And the situation could get much worse. The number of retirement-age women will increase by 84% in the next 20 years to 9.6 million, according to US Census figures. Meanwhile, the divorce rate remains stuck at about 48%.
"In terms of living standards, it's not the widows who are the worst off," says Martha Ozawa, a social policy professor at Washington University in St. Louis. "It's the women who enter retirement either separated or divorced."
Poorly constructed divorce settlements and short-term thinking — trying to hang onto a dream home that took two incomes to support, for instance — can cripple women's finances. Divorced women also often get shut out of their ex's pension benefits.
As a result, many divorced women are forced to move in with their children, rely on loans from relatives, or seek other sources of outside income. Lee Ann Luttrell, 53, of Las Vegas rented out rooms in her home after her 27-year marriage ended in 1996.
Even in the best of circumstances, many divorced women are forced to work long after the traditional retirement age. Jennifer Solomon, 54, co-author of a study on retirement income and a professor at Winthrop University in Rock Hill, SC, contributes regularly to her retirement savings plan. But Solomon, who got divorced at 38 after 20 years of marriage, didn't start contributing to the plan until she was 44. She received no pension benefits in her divorce settlement.
"My Social Security statement has all these zero years," she says. During most of her marriage, she stayed home with her children, so for those years, she has no earnings that count toward Social Security benefits. Solomon expects to work well into her 70s.
Studies show that divorced men fare far worse in retirement than men who remain married. But divorced women are further hindered by uneven work histories — the average working-age woman spends 11.5 years out of the workforce, mostly caring for children — and lower salaries.
Poorly constructed divorce settlements are another key reason for the problem. They can be devastating, especially for elderly women who need to rely on pension rights as an ex-spouse.
Divorce lawyers can seek a court order that typically gives part of the husband's retirement benefits to his former spouse and children. But the rules governing such orders are complicated and the execution frequently flawed. The rise in stock options, profit-sharing and other non-traditional compensation further complicates reaching an equitable settlement.
Luttrell thought her 1996 divorce settlement included a portion of her former husband's pension. Not long after, she learned the order was invalid.
She receives $750 a month in alimony, but under the 10-year term of the divorce settlement, payments will stop in six years. Unable to work for health reasons, Luttrell spends most of her time fighting for a portion of her former husband's pension. She is representing herself because she can't afford a lawyer, but getting the courts to listen is hard, she says. "Once your case is messed up, nobody wants to help you."
Similarly, neglecting to insist on a survivor's benefit — which ensures benefits continue after the ex-husband's death — can come back to haunt divorced women, because women often live longer than men.
Pauline Orr, 69, of Venice, Fla., thought her future was secure when her 40-year marriage ended in 1994. But when her ex-husband died in 1995, her income dwindled from about $2,000 a month to $200 a month because her divorce settlement included no provision to continue pension payments from his job as a federal employee.
Faced with the loss of her home, Orr wrote to federal and state legislators seeking a review and sued her lawyer for malpractice. She won a $400,000 judgment against her lawyer, who later filed for bankruptcy. She has yet to collect.
Finally, after her story was chronicled in the Sarasota Herald-Tribune, the US Office of Personal Management, which administers federal employee pensions, reviewed her case. In March, it agreed to restore Orr's benefits, making them retroactive to 1995.
But Orr's victory is unusual, women's advocates say. Persuading a pension plan administrator to restore benefits is a long, expensive process, and many divorced elderly women can't afford to hire a lawyer.
While it's easy to blame heartless husbands, women often make themselves vulnerable, financial planners say. Too often, they give up a portion of their ex-husband's pension or other retirement savings, such as a 401(k) plan, in exchange for the house or other immediately accessible assets.
It's a choice that can cost them a secure retirement.
Dee Lee, a financial planner in Harvard, Mass., says she often advises women to sell the house and split the proceeds in exchange for a portion of the ex-husband's retirement benefits. When a client insists on keeping the house for the sake of her children, she says, "I tell them, if it's that important, sign a contract with your children, because they're going to have to take care of you in your old age."
Lee says the booming housing market has exacerbated the problem. Rising home prices and a strong economy have led many couples to invest much of their joint income in their homes. When the marriage dissolves, women often sell within a few years because they can't afford to maintain the house on one income.
Women who have won retirement benefits say finding a good lawyer is key to success.
Suzanne Pozzo, 54, of Los Angeles feared she would lose everything when her 32-year marriage ended three years ago. She married her high-school sweetheart and spent most of her marriage taking care of their children, entertaining and doing volunteer work while her husband launched a successful business. He argued that since he had built the business, she had no right to a share, Pozzo says.
Pozzo eventually won half the value of the business and was able to keep her Brentwood home. But the fight was long and costly. She spent months interviewing attorneys before she found one she trusted. She also hired a forensic accountant to figure out the value of her former husband's business.
Too often, women jeopardize their future security because they want to put the pain behind them, Pozzo says. "You've got to hire people around you that you feel confident are representing you," she says. "You just can't give up."
Recognizing the role Social Security plays in many retirees' lives, presidential candidates George W. Bush and Al Gore have proposed reforms to the system. Bush wants to give workers the option of investing part of their payroll contributions in personal retirement accounts. Gore would supplement Social Security with voluntary, tax-free savings accounts that would be matched by the government.
Both candidates say their proposals would ensure that Social Security is solvent for future retirees. But retirement experts say shoring up Social Security won't save divorced, elderly women from poverty — pegged at $7,990 a year for individuals 65 and up. According to the Social Security Administration, the average retired woman receives just $8,376 a year in Social Security benefits. Many divorced women earn much less.
Instead, divorced women must construct what policymakers call the three-legged stool of retirement: Social Security, personal savings and company retirement plans:
Women should learn about their rights to their spouse's retirement savings before the divorce, says Ann Moss, a Washington, DC, attorney and author of Your Pension Rights at Divorce. "Attorneys don't always think of things like survivor's benefits."
Take advantage of spousal Social Security benefits. A woman who was married for at least 10 years before her divorce may qualify for benefits based on her spouse's work history, rather than her own. In many cases, that results in larger payments.
Working women should take greater advantage of 401(k) plans and similar programs. Unlike traditional pensions, women don't have to stay at the same job for years to benefit from those plans. A woman who leaves her job to care for her children can roll her savings into an individual retirement account.
With compounding, even small contributions to retirement savings can go a long way, especially if women start saving while they're young, says Cindy Hounsell, executive director of the Women's Institute for a Secure Retirement.
Sometimes, that means putting long-term retirement security ahead of children's short-term desires. Instead, she says, "put it in an individual retirement account."