January 7, 2008 by wendy.

Do you feel that Social Security will only contribute a small fraction of your retirement income? Don’t discount the effect that Social Security can have on your retirement! According to a report titled “ Women and Retirement Security”, prepared by the National Economic Council Interagency Working Group on Social Security, social security payments are critical for women in retirement. Major reasons given are:

1) Women Have Lower Income in Retirement than Men — And Thus Higher Poverty Rates. The poverty rate of elderly women was 13.1 percent, compared to 7.0 percent among men. Among unmarried elderly women, the poverty rate was significantly higher — about 19 percent.
2) Social Security Constitutes a Large Percentage of Women’s Income. Elderly unmarried women — including widows — get 51 percent of their total income from Social Security. For 25 percent of unmarried women, Social Security is their only source of income, compared to 9 percent of married couples and 20 percent of unmarried men. Without Social Security benefits, the elderly poverty rate among women would have been 52.2 percent and among widows would have been 60.6 percent.
3) Women Face Greater Economic Challenges in Retirement. First, women tend to live longer: a woman who is 65 years old today can expect to live to 85, while a 65 year old man can expect to live to 81. Second, women have lower lifetime earnings than men do. Hence, women have smaller savings than do men. And third, women reach retirement with smaller pensions and other assets than men do.

Social Security rules can be a bit confusing. Basically, if you are divorced after at least 10 years of marriage to the same person, you can collect retirement benefits on your former spouses’ social security schedule. You need to be at least 62 and your former spouse must be eligible for social security or is currently receiving benefits. Depending on the age that you begin collecting benefits, you may be entitled to receive the greater of an amount approximately 50% of your former spouse’s benefits, or b) your benefits based on your own earnings. The exception to this rule is if you remarry. If however, your second marriage was to end later whether by divorce, death etc., and you were previously receiving a spousal benefit, you would again be eligible to receive that benefit.

What does this mean to you when divorcing?
1. You must be married to the same spouse for a total of ten years. You can be married, divorced, and eventually remarried, as long as the total time is to same spouse is ten years.
2. In some cases, if you have a shorter marriage, you may want to delay a divorce until after you have been married for a total of ten years.
3. Be aware that a re-marriage (to a different spouse) will cancel your social security spousal benefit from the husband from which you are receiving benefits. Because of this rule, many older couples do not remarry, but choose to co-habitate.
4. Although you may be tempted to have a burning ceremony after your divorce, be sure to save copies of your marriage certificates, divorce decrees, and other relevant paperwork. This way, if necessary, you can prove your marriage and divorce in the future without the hassle of obtaining copies from a governmental entity.
5. Social Security benefits count as income when calculating child support.

Social Security will continue to be important for women in the future. As the labor force participation rates of women continue to rise, women in the future will reach retirement with much more substantial earnings histories than in the past. Therefore, the percentage of women receiving benefits based solely on their own earnings history is expected to rise from 37 percent today to 60 percent in 2060. Being aware of your earnings, your spouses’ or your ex-spouses earnings record at the Social Security Administration will ensure that when you are ready to retire, you will know what your will be receiving and can plan accordingly.

The Social Security Administration is a great resource for questions related to divorce and social security benefits. You can reach them on-line at www.ssa.gov or by calling them at 1-800-772-1213.

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December 22, 2007 by wendy.

Many divorcing and single people tell me that they dislike Christmas – it is boring, dull, depressing, and a generally awkward time of year. In trying to understand why many people feel that way, and in an attempt to find a solution, I interviewed my last guest writer for this blog site, Suzanne Simpson, a Licensed Psychotherapist and Coach. I’d like to share some excellent and informative tips that she provided. I hope you find them helpful.

Question: Why do divorcing people feel depressed at Christmas – this should be a joyful time of year?

Answer: “Christmas is a season of giving, but the experience often turns out to be one of so much sadness and depression. When clients are newly single or divorced, they experience a loss of family connections. Moreover, for many clients the image Christmas is based on our childhood experiences or fantasies. These images can create great pain if we see our present experiences as not measuring up to these expectations.”

Question: What is the impact of unrealistic holiday expectations for divorcing people?

Answer: “Expectations that are unmet will usually lead us down a path of emotional pain. Suddenly, we are demanding things of others that they can’t meet. We may try to be Super-mom: choosing just the right gifts, cooking everything we think others will like, and working hard to look good. We compare our lives to those happy families the movies and magazines portray. All of this pressure we place on ourselves can leave us depleted and unable to meet our expectations.”

Question: From what you are telling me, a lot of unhappiness is brought on by our expectations. Therefore, how do we change our expectations?

Answer: “It is important to recognize that what we perceive to bring us happiness will not necessarily be that which makes us happy. For instance when I was a young girl, I thought that if I received the most presents under the tree that would make me happy. I was so eager I would even open a few presents before Christmas and wrap them back up again. At that stage in my development, I was naïve enough to think that getting presents was the answer to feeling good. With more maturity I am now aware that gifts won’t give me those good feelings, but that I can create that within myself. Happiness is an inside job and no one person can give that to us. Creating the right emotional state is key. So, when they say this is a season to be joyful, I believe that it is a feeling we can have now as well as experience all year round.”

Question: Do you have any recommended actions people can take to create the right emotional state?

Answer: “Absolutely! Start monitoring your mindset by placing your thoughts on a daily focus and inner dialogue that makes you feel great. In addition, letting go of the expectations that Christmas needs to meet an image of what you have fantasized it to be. Some of my favorite tips for getting through the holidays health and happy are:
· Think of giving without any expectation for anything in return
· Don’t let your mind go to self-pity or comparison with others
· Practice loving those that are difficult family members
· Be aware of overindulging on sweets or alcohol which spike your insulin levels
· Find contentment in the simple things such as reading a good book, going to see Christmas lights, or spending time with friends and family
· Take advantage of things slowing down to get more rest and practice good self-care
So, turn your sadness into joy and make it the best holiday season ever! You can choose what you want to make it.”

From what you’ve said so far, I would add that I see the holidays as a challenge for many people, but especially divorced or divorcing people. It is especially difficult from a financial standpoint. People are learning to live on one paycheck when it was difficult to live on two salaries. Buying holiday gifts and overindulging can lead to additional financial stress. If your Christmas is blue rather than merry and bright, you may want to try some of Suzanne’s ideas this year – your holiday season can only get better!

Suzanne B. Simpson is a Licensed Psychotherapist and Wellness Coach. She has a private practice in Littleton specializing in helping people going through major life transitions. She helps her clients find empowerment by identifying emotional patterns that keep them stuck and unable to move on with their life.

Visit her at www.connectcoach.com Call for a complimentary introductory coaching session. (720) 981-0713.

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November 30, 2007 by wendy.

Dear Readers: I am posting a guest article by a colleague on a question that is shared by most people going through divorce - how to handle the often roiling emotions that occur during the divorce process. Not only can such emotions be draining, they can often be counter-productive when dealing with the soon-to-be ex-spouse, handling children, performing tasks, and making important decisions. I hope you find this article useful. Feel free to provide feedback on this or any of the other postings.

Wendy W. Spencer, CFP®, CDFA™, and Family Law Mediator

The Emotional Roller Coaster – Smoothing Things Out During Divorce

Going through a divorce can be somewhat devastating and bring up a wide range of emotions from anger to self-pity and loneliness. We usually haven’t developed very healthy ways of dealing with these feelings. Anger can many times be directed in ways that either leads us to constant conflict with our ex-spouse or feelings of depression if it is turned inward. We may tend to have anger around money issues that can become the one area we hold onto to control while going through the separation and divorce. It becomes the big source of conflict that keeps us tightly connected to our ex-spouse.

Typically there are three stages that anger shows up in. The first is the experience itself that causes the anger such as the divorce. The second is our reaction to the experience and the third is the attitude of our heart because of that experience. What we want to avoid is it going into the third state of hardening of the heart. What we do in the reaction stage is critical to preventing the hard-hearted attitude. If we work with our interpretation of the event, we are better able to reframe our thoughts and create more positive feelings.

Learn to recognize anger’s roots, which many times are expressed as our more vulnerable feelings, such as sadness from broken dreams or promises, being betrayed, or betraying one’s self. Another is the fear of the future; can I make it alone, will I have enough money to support myself, or how can I make a living? These are all common underlying feelings that need to be acknowledged and faced.

The typical unhealthy ways of dealing with anger are rage and repression. Rage develops when you allow the feelings to fester, thus creating more intense anger. With repression, you turn the feeling of anger inward and internalize it. This only makes matters worse, and many times you become numb as to what you really are feeling which leads to depression.
The more healthy ways to deal with anger are as follows:

· Redirect your anger appropriately - at the divorce, the broken dreams, the wreckage; not your ex-spouse, your children, or yourself.
· Take your negative energy and invest it into something positive; join a health spa, go to night school, or start a hobby.
· Invest in people; get involved in a support group, do volunteer work in an area of interest, find supportive friends that have mutual interests.
· Do some journal writing where you are able to get out your feelings on paper.
· Redirect your thoughts to create more positive feelings daily.

Suzanne B. Simpson is a Licensed Psychotherapist and Wellness Coach. She has a private practice in Littleton specializing in helping people going through major life transitions. She helps her client find empowerment by identifying emotional patterns that keep them stuck and unable to move on with their life.
Call for a complimentary introductory coaching session. (720) 981-0713, or visit her at www.connectcoach.com.

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October 29, 2007 by wendy.

A Client’s Perspective on Collaborative Divorce

By:  Wendy W. Spencer, CFP®, Certified Divorce Financial Analyst™

I have a financial planning client, who I will call Amanda.  She thought everything was going well in her life.  Her business was growing, her husband just received a fantastic promotion, and, in their mid-fifties, they were looking forward to their retirement and a move to a mountain area, where they had purchased land to build a country home.  Soon thereafter, Amanda became suspicious when her husband started walking the dog at unusual times, and going out of town more frequently than usual.  Actually, he was making calls to his new girlfriend who he was seeing on the sly.  When Amanda found out what was happening, the marriage was over. Amanda’s hopes and dreams had vanished, along with a husband, a father for her son, their much-anticipated retirement, and her economic stability.  Understandably bitter and angry, Amanda was determined to get the very best financial settlement for herself and her son. 

She was referred to an attorney who proposed a new type of divorce – collaborative.  Both she and her husband would have attorneys.  It was very important to Amanda to have someone on her side, fighting for her, and helping her to cut the best deal possible.  Her husband, passive about the divorce, hired an attorney to help advise him and steer his settlement.  Sounds like a typical divorce – but it wasn’t.  The four of them met together to discuss their issues and to satisfy interests.  Amanda knew that she would have to be in frequent contact with her soon-to-be ex-husband because of issues that would arise with their son.  Therefore, as angry as she was, she knew that it was important to maintain a decent relationship with her ex.  Also, she knew that she was more likely to get a favorable settlement if she was reasonable. 

Their financial situation was complex, so the attorneys brought in a Certified Divorce Financial Analyst™ (not the author in this case), to produce “what if?” scenarios of different settlement options.  The CDFA™ also helped them to gather financial information about their marital assets, budget, and to complete their financial affidavits.  Amanda was also able to get a picture of what her future financial situation could look like, so she could do some advance planning.

When I asked Amanda about her experience with collaborative divorce, she told me that while she was incredibly angry about the divorce, and that the meetings were physically and emotionally draining,  she was, however, very satisfied with the process.  She was able to express her needs, and most importantly, have them heard and acknowledged.  She was able to maintain a decent “working” relationship with her ex-husband.  She felt that she had high quality legal advice, and that the financial advice was invaluable.  The settlement was very comprehensive, but reasonable.  Amanda also liked the team approach, with attorneys and the financial expert working together, rather than piecemeal.  Although she and her spouse did not require the services of a coach, she felt that coaching could be very helpful when dealing with intense emotions.  All in all, Amanda felt that collaborative divorce helped her to make the best out of a bad situation and was a healthier process in the long run than a litigated divorce.

 Is collaborative divorce right for everyone?  Probably not.  Collaborative divorce is sort of like mediation, but on steroids.  All parties, including the attorneys, financial specialists, coaches, etc., agree to work together to resolve the parties’ differences and meet their concerns.  Collaborative divorce may not be cheaper than the traditional litigated divorce, but it can help people craft agreements that meet their needs, and, in the long run, be more emotionally productive.

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May 24, 2007 by wendy.

   All too often divorce professionals view divorce as just a series of legal proceedings.  Divorce papers are served and filed with the court, attorneys request additional paperwork from the other party, the couple has court-mandated dates to meet and parenting classes to attend, attorneys negotiate with the opposing side, and ultimately, sooner or later, the divorce is final.  At that stage, the perception of many of the professionals involved in the divorce is that everything is over and erased.  They believe that people just go on with their lives, as though a book has been finished and put away.  Unfortunately, the reality is not quite that simple.

 
  For the affected couples and their families, the impact will be felt for a very long time.  Some people will deal with the after shocks of divorce for the rest of their lives.  Many will be damaged by a formerly dysfunctional relationship and some by the ugly and protracted court battles and settlements.  People subjected to major life upheavals need time to recover. Certainly, they must attend to the mundane everyday chores, but they should not neglect their own emotional well-being.  Families too, including children, may often need to deal with their emotional states, such as grief, anger, and depression to begin healing and living healthier lives.

 
   It is important for divorcing couples to recognize that divorce is not just a well-defined set of legalities, but is a series of interrelated processes unique to each individual.  These processes may include legal, emotional, financial, interpersonal, and practical areas.  Depending on the situation and the individuals involved, some areas will need more or less attention.  One spouse may move on quicker than the other, some children will fare better than others, but divorce is a drastic change for all people involved.

 
   How can people help themselves through this deeply involved divorce process?  Several ways come to mind: 

1. Choose a non-adversarial divorce, if possible.  The method of divorce (litigation, mediation, collaborative, or pro-se) may influence relationships with the soon-to-be former spouse and/or children.  If at all feasible, the least adversarial process should be chosen, to help maintain workable relationships with the other party.  Even if a party chooses to divorce by a pro-se (aka: do-it-yourself) method, a reputable family law attorney can help an individual navigate through the often-confusing legal process and help an to ensure the person understands their rights.

2. Get help from the experts.  It doesn’t have to cost thousands of dollars, but conferring with a therapist to work through the confusion and anger will go a long way in helping future healing.  Other experts could be a good divorce financial analyst, a reputable real estate broker or mortgage broker, a CPA skilled in business valuations or stock options estimating, and others professionals, depending on the particular situation.

3. Surround yourself with loyal friends and family members who are upbeat and encouraging.  This is a not the time to be around negative colleagues or neighbors – they can just bring you down, and can often be draining.                                                           
4.  Do something nice for yourself that doesn’t have to cost a lot of money – something that may make you look better (a manicure), feel better (a massage, a work out, or a new music CD), or an upbeat and interesting book.  Take a long weekend for a mini-vacation, or purchase a gym membership.

   Understand that finishing a relationship and adjusting to a new life takes time – and work.  Therapists tell me that although individuals’ reactions are unique, many people make take one or two years, sometimes more, to feel comfortable in their new lives.  Remember, this type of dramatic change is truly a process, which eventually people will finish and be able to go on to a healthy and productive future.

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May 14, 2007 by wendy.

In the course of my divorce financial and mediation practice, I have often had clients repeat some specific piece of information they received from a well-meaning relative or friend. In general, such information should be taken with a very large grain of salt, indeed. 

Some of the advice may be absolutely accurate – in another state.  Still other advice is outdated, perhaps based on an obsolete part of US income tax code, or is misinterpreted in such a manner as to be financially dangerous.  These bits and pieces of advice often morph in the telling, gaining the stature of a new “urban myth”, with people swearing that they know that their factoid is absolutely true.

Some of this information can cause the divorcing person to make some drastic mistakes that can affect them for years to come.  These unpaid advisors and cheering squads, with the very best of intentions, often urge their divorcing friend or loved one into very short-sighted courses of action, with the result of damaging any future relationship with the spouse, or sacrificing their future retirement to get revenge, or for other short term purposes. 

Some of the most common myths, mistakes and myopia are often easily corrected – if done ahead of time and prior to the divorce being finalized or a settlement document being signed.

MYTH - Inheritances are considered to be a part of marital property.  In Colorado, inherited property or that received by gift, if not commingled with marital funds, is generally considered separate property.  However any gain on the inheritance during the time of the marriage may be considered to be marital property, and thus subject to division during the divorce.  For example, if you inherited or brought into the marriage a brokerage account worth $50,000, unless you put your spouse’s name on the account or transferred some of the funds into a joint account (or used the funds to purchase an item for the enjoyment of the spouse and family), only the gain (if any) should be subject to division during the divorce. 

MYTH - IRA rollovers from one spouse to another are taxable and subject to the 10% penalty for early withdrawal.   This could be true, but if done correctly, the transfer may not be taxable, and possibly,  the 10% early withdrawal penalty can be avoided.  For example, if the divorce decree specifies that one spouse transfer part or all of his/her IRA to the other spouse, AND the rollover occurs from the transferring IRA custodian to the spouse’s receiving IRA custodian, the transfer is not a taxable event, nor is a 10% penalty invoked.  A spouse receiving the IRA account may choose to take some or all of the funds in cash.  If done within IRA 72T guidelines, the amount received in cash is taxable, but no 10% penalty is incurred.

MISTAKE – The value of a defined benefit pension, such as a PERA or a Civil Service Pension is the amount contributed by the employee spouse.  These and other “old fashioned” pensions, are often worth far more that the contributions by the employee, and often have a cost of living adjustment for retirees.  The best way to obtain the value of these kinds of pensions is to have a professional pension valuation performed.  Often one spouse has a large value tied up in his or her pension, and if the pension is not divided, other assets must be used to compensate the non-pension spouse.

MISTAKE – Having fun with the divorce proceeds.  Some divorcing people view the receipt of funds received as a result of divorce as a lottery winning, or as manna from heaven.  They feel as if they have earned the settlement proceeds, and spend it as soon as they get it.  Friends and family also may inappropriately encourage their loved one to enjoy themselves, and go ahead and spend.  Taking a cruise or taking the children to Disney World may sound great, but in the long run, it often is not the best use of such funds.  Until a person has a solid financial plan for utilizing the money, and has established a good financial footing, it is often unwise to spend money that can be used to build for a comfortable future.

MYOPIA – I just need extra money today – I don’t care about the future.  Many people are so anxious to get through the divorce process that they will settle for any proposal that appears OK to them.  Still others will agree to receive cash today, even if receiving part of other assets, such as IRA funds, would make more sense in the long run.  Sometimes retirement funds are worth their proverbial weight in gold.  They grow tax deferred, and the penalties for early withdrawal help discourage people temporarily short on cash to dip into the retirement funds.  Having an IRA grow for ten, twenty or even thirty years can make a huge difference in a person’s ability to retire.

MYOPIA - Keeping house as a retirement plan.  One of the divorcing couple often wants to keep the house.  They may be very attached to it, they may not want to uproot their children, or it might not be a good time to sell or refinance the house to buy out the other spouse.  Nevertheless, keeping the house may not be the very best idea.  Sometimes the house is too big, too expensive, and too difficult for the spouse to maintain.  As a
”retirement plan”, the house is often a money pit.  As it grows older, the value may not increase as much as the owner predicted.  After calculating long-term maintenance and selling expenses, the person may actually have a negative balance, compared with other investments.  A better approach for many would be to sell the house and buy something more affordable; as their income improves, they may be able to trade up to another house or another location, should they wish to do so. 

Like many topics, a myriad of inaccurate information abounds about divorce.  I have found that accurate knowledge is a divorcing persons best ally to avoiding some of the nastiest errors.  Take classes, read books and articles, and work with knowledgeable and reputable experts helps people to weather this complicated and emotional time.  People should always review decisions they are making to include the long-term ramifications, in addition to the short run benefits. 

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January 26, 2007 by wendy.

   It seems to me as though most people begin their divorces after the beginning of the New Year.  Maybe they are waiting to get through the holidays before making any life changes.  Possibly the advent of January also inspires people to decide to make a change. In fact the month of January is named after the Roman god of doorways and archways. Romans had many freestanding ceremonial gateways called jani, used for symbolically auspicious entrances, or exits.

 
   Because of my observation of these curiously timed marriage exits, I asked my colleagues in the divorce field about their perceptions with this unusual tendency.  They all agreed that the rate of initial filings certainly goes up at the beginning of the year, and after Valentine’s Day. 

 
   As a matter of fact, an article in a February 2006 issue of the Wall Street Journal discussed how Valentine’s Day is often the watershed event that motivates people to begin their divorce.  Marriages already on the edge tip over to dissolution when expectations are not met, or the romance is not there, or for any number of causes.  Moreover, according the WSJ, if one of the spouses is having an affair, it is difficult to participate in romantic Valentine’s Day activities with two other individuals simultaneously. 

 
    For those of you who have decided to change their lives and their marital status in the New Year, know that you are not alone.  Many people have decided to use the beginning of the year as the beginning of their new lives.

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December 11, 2006 by wendy.

   Some people believe that a divorce settlement should be precisely 50/50.  Generally, an equal settlement for each party is often the result, but a case can be made for more or less, depending upon the circumstances of the couple.  More about that in another posting.  The 50/50 proposition, however, can be taken too far.  I have seen couples who divide up each of the IRAs and various accounts, and create a lot of unnecessary work and expense.  Sometimes the division of assets in a 50/50 spread also creates unexpected and unpleasant tax results.

   If a couple is trying to achieve a 50/50 settlement, each can trade assetsfor other.  For example, one person could take all of the IRAs and some additional cash, to make up for the amount the other spouse would have in a 40lK plan.  This could save money and effort of writing Qualified Domestic Relations Orders, with the result of a 50/50 settlement without all of the extra paperwork and complications.

    Moreover, depending on their circumstances, one person might need more cash, and less retirement funds, or need and want the house in lieu of the IRAs.  Trading assets between a couple is often a good way to settle things without going to court.  However - a divorcing person should take care not to give up assets that could be potentially more valuable than the stated dollar amount (such as 40lks or pensions).  If a person does trade assets that have more potentialfuture value, the divorcing person should  have very carefully considered their options, or should have received an incentive (such as extra cash) to make up for the possible “lost opportunity cost”.

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November 19, 2006 by wendy.

   I sometimes have clients who are so overwhelmed with all of the details involved in getting divorced that they don’t know where they should begin.  One client wondered how he could get all of the tasks done and still be able to work and to function.

   There are two techniques people can use to handle the myriad of tasks required.  The techniques can be used either independently or together.  The first is to list, step by step, all of the major tasks that must be done, such as “complete financial affidavit”, or “finish parenting plan”, or “put house up for sale”.  Certainly, each person may have sub-tasks under each, but this way, the divorcing person knows what major steps must be accomplished.   Approximate dates can be established (sometimes the dates are set by the courts) so that the person knows how long they have to complete the work and can adjust their efforts accordingly. 

   The second technique involved focusing on the one task.  I advised one of my clients who was becoming scattered because he didn’t know where to start.  I suggested that he focus on one thing at a time.  Because he was at the stage of completing the financial affidavit, I suggested that he focus just on that one document, finding all of the supporting paperwork, and put his efforts into finishing it.  That way, he could then go onto the next step without thinking about all of the other things to do, which were distracting and might be premature without an agreement from his spouse. 

   Looking at the big picture or concentrating on the details - either way it is helpful for divorcing people to have a process to help them handle the multitude of tasks and get them through the divorce more easily. 

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November 9, 2006 by wendy.

   If you and your spouse are relatively amicable, but you have certain sticking points about your divorce, mediation may be for you.  Why?  You have a neutral third party helping you to reach resolution in a constructive way that is non-threatening, creative, and permits a friendlier future relationship.  You also have the opportunity to develop your own solutions, and not have them imposed upon you by a judge.  Moreover, people who help develop their own solutions are more likely to adhere to their agreements than those who have a solution mandated by an outsider. 

   If those are not sufficient reasons to try mediation if the situation is right for you, consider the costs of two attorneys, expert witnesses, and a protracted and hostile court case.  For some, the litigaged case is necessary.  However, many couples have difficulty living on two incomes, and living separately on one income will be very challenging indeed.  Cutting divorce costs may make sense to them as well. 

   So - it may be possible to save money, end your relationship constructively, and have a healthier future relationship with your spouse with mediation - if both want to mediate rather than litigate. 

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