Protecting your financial future

Bitter arguments, shrewd lawyers, he pays alimony, she gets the house … Most of us have preconceived notions about divorce based on what we’ve seen in the movies or perhaps within our own families. But the reality is much more nuanced, especially when the couple doesn’t fit traditional norms.

Divorce is a common ending to many once happy unions — approximately 42% of first and 60% of second marriages.¹ Consider also that women are now the sole or primary earner in 16% of U.S. households, compared to just 5% in 1972.² Taken together, these stats mean that divorce may be a fact of life for many high-earning women.

While no one wants to think about unhappy endings, if you’re entering into or currently in a marriage, you should be prepared and protected. Here are some of the unexpected and less discussed financial considerations for high-earning women before and during marriage, as well as throughout the divorce process.

Before the conversations about a ring even begin, it’s important to have an open and honest discussion about money, both the assets you’ll each bring to the marriage and how you’ll combine your finances (or not) once you’ve said “I do.”

The biggest single piece of advice for couples on the cusp of marriage, regardless of their financial status, is to discuss a prenuptial agreement that outlines which premarital and marital assets will belong to each spouse in the event of a divorce. It’s time to let go of the taboo around prenups; these days, it’s just another legal document that comes with getting married.

Think of it as a crucial piece of protection, akin to adding a beneficiary to your personal assets. This is especially important to consider when one partner comes into the marriage with a higher income and/or net worth. It’s much easier and more pleasant to develop such an agreement when the relationship is amicable rather than once a separation has been initiated.

While each partner should retain their own lawyer to draft up this agreement, one lesser-known tip is to also enlist the guidance of a financial professional to help anticipate and prevent costly mistakes. The value of certain assets can vary widely over time. A financial professional can help you set yourself up for the most equitable outcome if you need to enforce your prenup someday.

While married: Be smart about titling assets

Regardless of the state of your marriage, you should keep your prenup updated as your life and financial situation evolve. One spouse might start and/or sell a business, or one might receive a major equity compensation payout — a common scenario for high-earning women in many fields, including media and tech. Keeping the document updated as you reach financial milestones can reduce uncertainty around which funds go with which spouse in the event of a divorce.

Inheritance is one of the most commonly misunderstood assets. In most states, inheritances are considered separate property. But if a well-meaning spouse puts inherited money into a joint account, it becomes marital property. Those funds should generally be kept in separate accounts so they are shielded from the complications that can arise from commingling assets in the case of a split. A pre- or postnup can also clarify that inheritances be kept separate unless specifically willed to both partners.

Retirement accounts, like workplace retirement plans and IRAs, are often misunderstood as well. While these are opened in one person’s name, they are intended to provide for both spouses in retirement. Therefore, they are treated as marital property and are fair play to split in a divorce unless otherwise specified in a pre- or postnup. High-earning women are likely to max out these accounts to reduce their taxable income in a given year and fund a tax-deferred plan that can grow significantly over time. You may want to mark these as separate property in your legal agreements.

Lastly, houses are a major source of confusion and contention. If you’re the higher earner and are putting up most of the money to buy a home with your spouse, you may want to have a provision in your pre- or postnup that you will recoup your portion if the home is sold as part of a divorce.

Going through divorce: Don’t sell yourself short

Most people don’t realize that only 5%-10% of divorces end in litigation.³ ADR (alternative dispute resolution), and more popularly, mediation, allow the divorcing couple to reach creative solutions for their unique situations.

Retirement accounts are one of the biggest things to stay vigilant about. Your spouse might offer you the traditional workplace retirement plan while they keep the Roth IRA. Even if the balance of the former is higher, you must consider the tax liability. Because traditional retirement accounts have been funded with pre-tax money, you’ll owe taxes on the withdrawals in retirement (and even more on any withdrawals made before retirement).

There are also certain assets that high-earning women may undervalue in a divorce, since their future value isn’t known at present. One of the most common examples is unvested equity compensation or private shares in a company. Your restricted stock units (RSU) or performance share units (PSU) might be valued at $1 million today, but if the company is unsuccessful at the end of your vesting period, that amount could go to half, or even to zero. Be sure you’ve accounted for this variability when dividing up assets.

Many, if not most, women going through divorce, whether they’re the main income provider or not, prioritize the comfort and stability of those around them, especially their children. That’s why many want to stay in their homes, even if it’s not the most financially advantageous decision. Understand the financial implications of holding on to your house, including taxes, maintenance and potentially HOA fees, before making a decision.

For all of these reasons and more, wealthy women should be on guard about not getting the short end of the stick during divorce proceedings. Of course, having a good lawyer on your side is key, but it’s also critical to involve a financial professional to know what you have now and might have in the future.

Putting it all together: Prioritize you

High-earning women are savvy about their careers and should apply that same level of savviness to their financial lives, before, during and — if needed — after marriage. Selflessness can go a long way in a relationship, but it doesn’t mean you should stop prioritizing yourself. Surround yourself with trusted advisors and friends, get the right legal documentation in place, and know your worth.

This article was written by Retirement Daily Guest Contributor from The Street Retirement and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.

1. “Revealing Divorce Statistics In 2024.” Forbes, November 20, 2024.
2. “In a Growing Share of U.S. Marriages, Husbands and Wives Earn About the Same.” Pew Research Center, April 13, 2023.
3. “What Happens If We Go to Court to Divorce?” DivorceNet.