Rebalance’s Christie Whitney talks budgeting, retirement savings, and inheritance protection with Ilyssa Panitz on her second appearance in the Divorce Hour segment.
Ilyssa Panitz: When you’re going through a divorce, one of the most important conversations you’ll have with your attorney is about what you’re financially entitled to and what you can realistically expect to receive in your settlement. There’s a long checklist of expenses to consider when planning for life after divorce, and one that should be at the top is health insurance.
Once your divorce is final, you generally can no longer stay on your former spouse’s employer-sponsored health plan. You may be able to continue coverage temporarily through COBRA, but that comes with a hefty price tag. So how do you make sure you have enough set aside to cover monthly premiums, deductibles, and other out-of-pocket medical expenses?
Joining us to break it all down is Christie Whitney, a Certified Financial Planner and Senior Vice President of wealth management with the investment firm Rebalance. Christie, welcome.
Christie Whitney: Thank you so much.
Ilyssa Panitz: Let’s talk about navigating the financial landscape after divorce. Not all assets are created equal, even when they appear to have the same dollar value. Can you explain the difference between pre-tax and after-tax assets, and why that distinction matters when negotiating a divorce settlement?
Christie Whitney: Absolutely. I encourage everyone not to look at the math so simply because, as you said, not all assets are created equal. Money in a retirement account, for example, is pre-tax money growing under a tax shelter. If you’re trading during the year, or earning interest or dividends, that growth is protected from tax.
Those accounts can grow faster than a regular investment account, which holds after-tax dollars. The tax has already been paid, and you’re investing what’s left in the market. Or maybe it’s just a large bank account; it doesn’t have to be an investment. Either way, those assets grow at different rates.
The other thing to think about longer term is that the retirement account will eventually be taxed, unless it’s a Roth. It’s more beneficial for a period of time, but you need to understand that its value will be reduced by taxes down the road. So dividing assets shouldn’t be, “You take this account, I’ll take that one; they’re both $200,000,” because the real value of that money is quite different.
Ilyssa Panitz: As a wealth manager and certified financial planner, you emphasize that dividing assets equally doesn’t necessarily mean dividing them equitably. Can you explain the difference, and why anyone getting divorced should look beyond the numbers on paper?
Christie Whitney: It goes back to what I was saying about dividing within each bucket of money.
Where it gets complicated is when someone wants a large asset, like the house. For most Americans, a lot of their wealth is tied up in their home. If one person wants to keep the house, how do you structure a fair buyout of the other person? And can you afford to do that?
Also, just because the house is worth a lot doesn’t mean it’s worth a lot to you today. It isn’t liquid the way other assets can be. And retirement assets you don’t want to touch until after age 59½, or you’ll face additional penalties. There are a lot of different things to consider.
Ilyssa Panitz: We all tend to concentrate on the now, but you encourage clients to think beyond the settlement and consider their long-term planning needs. What questions should they ask a financial professional before signing an agreement?
Christie Whitney: Long-term financial planning is separate from estate planning. Estate planning covers things like setting up a living trust, if that applies to you, and who is named on your accounts to inherit them. We often see people forget that piece.
If you’re engaging a financial planner, it’s very important to understand not only how they’ll invest your money, but also how they charge you and what the relationship will look like.
Is it, “We set everything up and see you later,” with no ongoing guidance? Or will they be there to help you review things before you sign the papers, and be there when you start a new job or evaluate a new healthcare plan? I think that’s really important.
Ilyssa Panitz: Let’s talk about a major expense that can dramatically affect someone’s financial future: healthcare. A Mercer report released in June projected that healthcare benefit costs per employee would rise 6.7% in 2026, the largest annual increase in 15 years.
The report also projected another 6% increase in employer-sponsored health plan costs in 2027, with workers potentially facing higher deductibles, co-pays, and other out-of-pocket costs. When you’re helping clients through a divorce settlement, how do you factor in health insurance and future medical expenses?
Christie Whitney: That’s a great question. It’s unfortunate, the state of our healthcare system in this country and the outsized inflation we see there.
We work with people to explore their options. You mentioned COBRA. That’s an option, but it’s typically expensive. Will they now qualify for an ACA plan when they didn’t before?
Beyond that, if there are children involved, hopefully they can stay on a parent’s insurance, and we factor that into child support and spousal support. If you’re going to be paying higher healthcare costs, that may support an argument for higher spousal support.
Ilyssa Panitz: When you combine rising healthcare costs with the high cost of groceries, gas, housing, and other everyday necessities, how can someone make sure their settlement will actually be enough to sustain them in the years ahead?
Christie Whitney: It’s a real challenge. If you were out there on your own trying to navigate all of that, it would be incredibly difficult.
That’s why it’s important to have someone to bounce ideas off of, whether that’s a financial planner or someone in your life who leads by example with good financial decisions.
If you can work with a financial planner, you can literally map out higher inflation and rising prices. You can also look at earning potential: what happens if you take this type of job versus that one, if a career change is also on the horizon.
Ilyssa Panitz: That leads into my next question. Gray divorce, which generally refers to divorce among adults 50 and older, presents a unique set of financial challenges. Many people in this age group are approaching retirement, as you mentioned, while others face age-related barriers in the job market.
In September, approximately 173,000 people between the ages of 55 and 64 had been unemployed for at least six months. When you’re working with someone going through a gray divorce who has been out of the workforce for an extended period and is struggling to find a new job, how do you assess their future earning potential?
Christie Whitney: This is a hard one. I haven’t worked directly with someone in that exact situation. A lot of the gray divorce we see involves people who are taking that step because they’re more financially comfortable and less reliant on their spouse.
But whether it’s due to divorce or unexpected unemployment later in life, we go to the financial plan and ask: Can you afford to take a job that pays 25% less? Or, more dramatically, can you afford to stop working altogether?
If the answer is no, we figure out what level of income can sustain you. It may be a multi-step process. Someone might take a job they wouldn’t have considered before, but that gets them back on track toward a higher-paying role down the road.
Unfortunately, ageism exists in the marketplace, and it’s a challenge. But having the numbers on your side helps you understand what you may need to do and what changes you might face in your day-to-day expenses.
Ilyssa Panitz: I want to go back to something we touched on earlier: the rising cost of healthcare, groceries, gas, and housing. I feel like I’m paying more for everything these days. When you’re going through a divorce and dealing with all these added expenses, is it possible to save on a single income?
Christie Whitney: That’s tough. I’m a firm believer that there’s always somewhere you can save, though I understand that’s not the case for everyone. When you’re living paycheck to paycheck and prices keep rising, it’s an ongoing struggle.
But try to control your spending as much as possible and see whether there’s any fat to trim, as they say. In many cases, there is. Start small and start saving, maybe with an automatic transfer into a savings account.
It’s really important to have emergency money on hand so you don’t fall into a cycle of credit card debt. It’s hard to get started, but once you set up habits like paying yourself first, it gets much easier. Then you have somewhere to turn if life throws you a curveball, or if a few years down the road everything costs more and you need to draw on another pot of money.
Ilyssa Panitz: Trimming the fat: where are some places people can cut back that will put more money back in their pockets?
Christie Whitney: The first thing that always comes to mind is dining out. Not everyone does it, but Americans as a whole spend a lot of money eating out. You’re probably paying four times what that meal would cost if you made it at home. That’s one I always encourage people to look at.
Being mindful of when and how you use energy and electricity at home is another.
Ilyssa Panitz: Those are great tips. Christie, how can people get in touch with you and learn more?
Christie Whitney: They can visit our website, www.rebalance360.com. We have a lot of information there on general investing and planning, with a trove of articles you can access. I’d encourage everyone to check it out.
Ilyssa Panitz: Great information. Christie, thank you so much for joining us.
