The One Term Every Prenup Should Include

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Listener Andrea shared a story that inspired this week's RGR: "I can't stop thinking about how my mom got screwed in a divorce and now has no retirement savings—she was a stay-at-home parent, and my father got all the assets in the divorce." We explore how to quantify and understand unpaid labor in the household, what stay-at-home parents can do to protect themselves, and other perspectives around gender norms and cultural beliefs.

Rich Girl Roundup is Money with Katie's weekly segment where Katie and her Executive Producer Henah answer your burning money questions. Each month, we'll put out a call for questions on her Instagram (@moneywithkatie). New episodes every week.

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Our show is a production of Morning Brew and is produced by Henah Velez and Katie Gatti Tassin, with our audio engineering and sound design from Nick Torres. Devin Emery is our Chief Content Officer and additional fact checking comes from Scott Wilson.

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Transcript

Transcript

Katie:

Welcome back, Rich Girls and Boys to the Rich Girl Roundup weekly discussion of the Money with Katie Show. I'm Katie Gatti Tassin, and on Monday mornings my executive producer Henah and I use this segment to talk through your questions, and interesting money stories that you send us or we see in the news, and just all around more casual financial topicsm right after a quick break.

Before we get into it, this week's upcoming main episode is about paid labor in America, how we got to this point, aka wage stagnation, the issues with at-will employment, which is kind of the primary employment regime in the United States and how rare that is on a global stage, and an interview with one of the most iconic labor journalists of our time, Hamilton Nolan.

Okay, onto our roundup. Henah. What is our question today?

Henah:

This week's question came from reader Andrea. She said, “I can't stop thinking about how my mom got screwed over in her divorce 15 years ago and now has no retirement savings. Her half of the retirement accounts was spent purchasing a townhouse and car, and my father got all the assets in the divorce after she spent 20 years as a stay-at-home mom, at my father's insistence, raising their three kids. She's now unable to work full-time because she has taken on the responsibility of caring for both her elderly parents who also didn't save for retirement. And my husband and I are now actively saving for her retirement because she isn't doing it. I know you have talked about these issues before, but I keep coming back to the unpaid work that women perform in this country and how it often puts women at a huge disadvantage in assets and retirement. It also perpetuates suspicious cycle of women being solely responsible for the caregiving that the government doesn't do.”

Katie:

Listen

Henah:

Cracks knuckles.

Katie:

Thanks, Andrea, for giving me this silver platter to the reviewer who was like, I used to like this podcast, but now it's just one-sided feminist ideology. My sincerest condolences. We are back. Thanks for giving me another chance to talk about this. Can you guys imagine how absolutely insufferable I am going to be once I actually have children of my own? I am scared for all of us.

Henah:

Same.

Katie:

This is in my mind the quintessential example of how a cultural belief becomes a policy becomes a personal financial outcome.

Henah:

Say more.

Katie:

So the cultural belief that is really nicely highlighted in this question is that it is a woman's duty to raise her family. You'll note that Andrea mentioned it was at her father's insistence that her mother stay home and be the full-time caretaker, that this is a woman's burden to bear really. And so that cultural belief then results in the fact that there are no policies to support working parents or childcare or elder care. It's assumed that this is something that people read women will deal with individually and privately behind closed doors.

So aside from maybe the child tax credit, which gets cut at every turn, the one time they increased it, they cut it again like the next year, aside from the child tax credit, there's really no genuinely family friendly policy. And so the personal financial result is that American parents are the most cost burdened in the OECD. They spend more money on raising kids than anyone else. And who disproportionately bears the brunt of that and who disproportionately experiences the downsides of those financial realities? It's the women. It's the mothers by and large.

Henah:

So I'm reading Everyday Utopia for the show, and it was a book that came at a recommendation from I think a listener, right? You had said. And it's basically a book about all these radical experiments that have happened over the last 2000 years about rebuilding society in a way that's better for everybody. And there's actually this quote that I just thought of as you were talking where it says, “Our insistence on individual family living also perpetuates the social norm that many types of care work followed women.” They said, “We are each tasked with doing the cooking and cleaning up in our own kitchens, doing our own laundry and our own private washing machines that sit unused most days of the week and mowing our own little pieces of lawn even though there are huge economies of skill to be realized in much domestic work. We know from history and from empirical studies recently conducted everywhere from Norway to Japan that more communal forms of dwelling can make everyone's lives less lonely, less harried. So why do we live the way that we do?”

And it just talks about how as a function of us investing in single family homes so much in this country, it all falls back on women. So continue your point, but I just thought that was a relevant interesting note.

Katie:

No, that was pretty much exactly what I'm trying to say. And the fact that—

Henah:

We're going to build a Money with Katie dorm, a quad, if you will.

Katie:

Also lawns are my other Roman empire.

Henah:

Oh, how they should all be weeds, right?

Katie:

They're just so stupid. I'm like, why do we have these stupid little green parcels of land that just suck up? I mean, I listen, I know all the dads in the audience are like, there was just a sharp inhale amongst all the dads that ride their little mowers around. I'm like, listen, I love that for you.

There's a creator on Instagram. Her name's Paige. Her handle is, @sheisapaigeturner, but spelled like the name. And she often will post videos that are calling attention to these disparities and talking about the mental load, what you'd probably expect to find in Eve Rodsky's book Fair Play, which basically focuses on domestic inequity as the core inequality on which all the other inequalities in our economy are built. But if you take that thread all the way down to the root, it kind of will always leads you back to this place.

And she often will post videos about this and without fail every single time, the most common rebuttal that you'll often find in the comments is like, well, you need to make a better choice. You need to either choose to stay home if it's that hard for you to work and have kids. You need to choose differently or choose better. Feminism is about choice.

And every time I see that, I think feminism is not about choice. Feminism is about equality. And the more that we focus on our individual choices or we focus on the decisions that individual women are making, the more we are not paying attention to the systems that determine what choices we have in the first place. So if you live in the United States where you are kind of more or less structurally incentivized to make certain choices, focusing on which of the bad choices you choose is just totally, we're missing the forest for the trees.

Whether you choose to be a working mother outside the home or a working mother inside your home, it's like all of that's kind of irrelevant. What matters is the fact that neither of those choices right now is delivering women to a very beneficial place. And so I really love the work of this writer named Moira Donogan, but she basically says feminist progress means liberation from the systems that limit our choices because some women, like rich women will always have options. Rich women will always get to pick the best of the bad choices, but there are a lot of women who will not get better options until things change for everybody.

Henah:

So I wanted to just quickly talk about the influence of culture here that you had kind of said is the first part of the equation is the cultural belief. And so I had found this piece from Quartz and it was about the Liberian activist Leymah Gwobee, and she had won the Nobel Peace Prize back in 2011, but she also had a really insightful exercise that showed men, a group of pastors that she was working with in her local community about the value of unpaid housework. So she had asked one of them, what does your wife do during the day? And he said, nothing sits home, eats my money and gossips. And so—

Katie:

Sounds like a nice guy.

Henah:

But I think this is so prevalent in machismo cultures, and this is something that I had researched in graduate school a lot, is just kind of understanding how, particularly in low income countries where women aren't really allowed to leave the home, what do men think that their wives do all day?

And so Gwobee said, okay, well get up and go to the blackboard and write down your salary. And then she asked him said, what does your wife do first thing in the morning? And he said, okay, well she made hot water. She said, okay, well write down how much you would pay to have someone do that if she weren't there. Then they went through all the chores that this pastor's wife completed on any given day and gave a monetary estimate for each. Then he calculated it for the month and the wife made more than him by the time that he had added up everything. It was just kind of like a distilled example, but I think it's illustrative because it transformed what the pastors and the other men in the room believed, who better understood it's not 20 minutes, 30 minutes a day. These are hours and hours a day that women are putting in.

And obviously also sometimes men are putting in invisible work that women don't realize. And so I just think it's an interesting exercise or example that kind of shows how something that was a cultural belief, how it really stems into the personal financial outcome of a family.

Katie:

Oh yeah. So I'm reading this book right now by a feminist philosopher named Kate Manne. It's called the Logic of Misogyny. Well, it's called Down Girl: The Logic of Misogyny. It's really interesting because it kind of tries to understand truly the logical underpinnings of how misogynist outcomes and tropes kind of function.

Henah:

Is this one of your 12 books in between?

Katie:

Listen, dude, I'm like, I literally considered slacking you yesterday to be like, hey, can you help me figure out what two week period I could just fall off the face of the earth for so I can disappear and finish reading, reading all these.

Henah:

May I recommend Christmas? December?

Katie:

For real. I'm only a chapter in, but I'm kind of just waiting for the part where they get into, and obviously men do invisible labor too. Yeah, don't want to take that away from men. But I do think it's interesting when you look at the kind of breakdown of the types of domestic labor, the way that domestic labor gets split along gendered lines and how typically the stuff that men take on as their own is the stuff that happens relatively infrequently or on a less frequent basis than the type of labor that the women are typically doing, which is the stuff that has to be done every single day. It's the work that is done and undone every 24 hours because you're talking about oftentimes cooking meals or the mental load that goes along with those things.

So again, I'm like, this is the one-sided feminist ideology coming out. But I do think the data does bear this out. The type of care work and domestic labor that is more often born by women is the stuff that is happening on a daily basis. It's the work that never ends.

Henah:

I fear that I'm throwing a wrench into your argument, which is just that Jovanni and I are the opposite, that he's doing a lot more of the daily work.

Katie:

She said, I love your data, but I have an anecdote.

Henah:

I have one specific story that should…

And one of the things that he and I have talked about is, yes, he will do some of the more daily domestic work, but when it comes to long-term planning and long-term decisions and health and finances, it's like I'm also keeping all of that in a running scroll in my head and I have to just send him lists of like, okay, did you get this screening done? Have you gotten your skin checked? Have you done this, that, and the other thing? And so I'm often like, what would you do?

Katie:

That’s why married men live longer.

Henah:

Oh, I a hundred percent believe that.

Katie:

So when we talk about the core inequity or the domestic inequity that happens where you kind of statistically see women bearing the brunt of that unpaid labor at home, I think what's really important is to acknowledge and quantify just how valuable that work is. Because in our economic system, things that don't have a dollar amount attached often get treated as though they are free. And as any person who does this day in and day out knows that work is not free, it takes time, energy, effort. And if you're not doing it yourself, you have to pay someone else to do it for you.

Henah:

So I actually found a blog post, it's back from 2020, so the inequities might've grown in that time, but it's a blog post from the St. Louis Fed Reserve Bank, also known as FRED. And it calculated the value of women's domestic labor that goes unpaid. And so they used Oxfam's methodology: They calculated the number of women over the age of 16, and then they multiplied that by 26.7 hours, which is according to BLS, the average hours per week spent on unpaid household work. And then they multiplied that times 52 weeks a year, and then they multiplied that times the federal minimum wage and divided by CPI to adjust for inflation. And so they found that US women's unpaid work in a single year was nearly equal to the GDP of New York state to the tune of $1.6 trillion.

Katie:

So if we were to assign a dollar value to this labor and we were to kind of treat it with the same legitimizing forces that we treat the rest of the labor that we do over a trillion dollars a year, that's unbelievable.

And I think that it highlights that the reason that people get into these situations like Andrea's mom, which is by the way, an incredibly common story. I hear that probably once a month from a listener who reaches out to share that and kind of, hey, okay, so now I'm saving for her retirement too. What do I do? There are trickle down effects beyond the very obvious human costs. But the reason this happens is because if you have the work of raising a family as one big group project and you've got work outside the home and work inside the home, but only the work outside the home is generating fungible resources and is generating money that someone can save and invest, you basically have a double whammy.

So not only are you not contributing to social security of your own, not only are you not generating income that you can save and invest for yourself, but you also don't have, we'll call them marketable skills. Now granted, that's kind of its own issue, but you don't have the work history that you would need if you suddenly needed 20 years from now to reenter the workforce, it'd be very, very difficult to get hired. So the statistical result of that confluence of factors is that the rates of divorced women living in poverty are 44% higher than the rate of divorced men who live in poverty. So it's heartbreakingly common.

Henah:

I actually found Edward Jones just revealed new research that said that nearly two thirds of women in the sandwich generation say that caregiving has negatively affected their ability to save for their financial goals. One of the stats that they said was, despite making 85% of household spending decisions, according to Nielsen, 65% of women say they'd be more confident in planning for their financial future if they had fewer caregiving responsibilities. And 57% of women in that generation reduced their professional responsibilities due to caregiving, which meant that they lost potential income. And so it is sort of this double-edged sword no matter which way it goes. Women are on the short end of the stick, even though I just said a sword analogy, but…

Katie:

Mixing metaphors well, yeah, and I mean there's a couple different, it feels like there's steps here because yes, the kind of individual level gender parody solution would be like, well, we just need to make sure that just as many men are making this decision as women, and when it's 50/50, then the outcomes will be equal and there will be equal numbers of old in poverty and won't that be great? Yay, gender equity.

But yes, that would be better than what we have now where women are bearing the brunt of it. But ideally, we start to consider the universal problem of caretaking as a universal problem that would benefit from universal solutions and kind of large scale policy change.

Let's maybe break down kind of the on an individual level, barring major care work policy reform that starts to take some of this stuff more seriously. What you should do if you're not married yet, and if you are already married, but you are already in this position, what are some financial things to keep in mind?

Henah:

Yes. First I should say that we are not certified financial professionals. This is not financial advice. Please talk to a CFP. But I was at a bachelorette party recently and I'm really fun. And they were saying that their fiancé is very much against a prenup. And so there were seven of us sitting in this room and I'm sitting there being like, no, it is so important and if I could go back and do it again, I would totally get a prenup, blah, blah, blah, blah. And I think they all thought that I was a little bit off my rocker.

Katie:

Was everyone else like, “Yeah, f*** a prenup.”

Henah:

I dunno that they were like “f*** a prenup,” but I think they were just like, I don't really think it's that important.

Katie:

Oh, they didn't have strong opinions about it.

Henah:

Yeah, they just didn't know. It just kind of was like, oh, it just protects your money. But I was like, no, it’s so much more than that.

Katie:

What must it be like to not have a strong opinion about everything?

Henah:

What is it? Strong opinions loosely held? That's us.

Katie:

Mine are strong opinions, strongly held, strong opinions, white knuckled grip.

Henah:

True. But I don't know. Did you watch Love Is Blind UK yet? Okay, well there is a whole small plot line as well about one of the men on the show wanting a prenup and the woman fiancé's friends all being like, he thinks that it's already going to shit and he doesn't want to support you, he wants it to go to his sister. And I'm like—

Katie:

Wait, no, they said he doesn't want to support. He wants it to go to his sister. Wait, hold on. Lemme get into the right frame of mind. Hold on. He doesn't want to support you. He wants the money to go to Wait, are we talking cockney or Queen British?

Henah:

I don't know. I guess it wants it to go. It sounded a little posh.

Katie:

He wants it to go to his sister.

Henah:

Oh, that's pretty good. That was pretty close. Okay, cool. Sorry Nick. My bad.

Katie:

Sorry, continue. I just got so animated.

Henah:

I was just going to say though that I know, I understand the idea that, oh, if someone wants a prenup, they're thinking negatively for the long run or whatever it's like, or it's just protecting you in any scenario. And as I just said, if I could go back and do it again, I would totally do that. And so I think that if you are not married, but you are going to be, that is something that I would highly recommend.

Katie:

To me. it's interesting that it feels like there is a cultural backlash happening to the prenup because I think that it feels part and parcel to me, like the broader kind of backlash and backslide of feminist progress that I feel like is kind of happening in the zeitgeist since 2020 where—

Henah:

Sorry, can you say all of this in a British accent?

Katie:

What if I could, but I literally can't. I don't know. I do think that there is a think piece somewhere in there. So someone who has the time and energy to do that, I would definitely love to know what the connection is between broader feminist progress backsliding and people thinking that prenups aren't a good idea. So if you aren't married yet, the reason—

Henah:

It’ll be out the blog in two weeks, everybody.

Katie:

And by someone I mean me in six hours.

But if you're not married yet, the reason that I think getting a prenup just to make this connection as clearly as possible, I think the reason that a CFP or a lawyer would tell you that a prenup is necessary if you're not married yet is not just because it's going to give you the ability to clearly define separate property and marital property and what have you, but because you can outline terms for spousal support. So if you can literally have a section that's about what happens to a partner to the spouse that hey, if someone stays home with kids for every year that they stay home with the children or for every year they're out of the workforce working inside the home, they're not earning their own money. These are the terms of spousal support that will follow.

There is a whole chapter of Rich Girl Nation about this topic and about how, I've spoken to several lawyers now who are like, yeah, judges are not kind typically when it comes to spousal support. So you might be married for 20 or 30 years and out of the workforce for 15 or 20 of it and you get divorced and you're 60 years old and the judge is going to be like six months of two grand a month and then get a job. And you're like, well, that's not going to, I can't do that. I gave up my ability to earn money by working inside my home.

So I think that the opportunity at the outset of a marriage when everything is basically in the best shape possible to define what happens if either partner chooses to leave the workforce, if that is the decision that is best for that family, what they will be financially entitled to should that marriage end. So obviously we can talk about what happens in an equitable distribution versus a community property state and how assets are divided.

It sounded like Andrea's mom received assets, but because she had no ability to earn additional money or she already had other caretaking duties by this point that prevented her from earning money, that spousal support income basically says you will continue to get an income that you can use to live on the way that you were when you were married.

Henah:

And I often think about what you've said before, I dunno, we've heard it before in a lot of places that are like, you have a prenup. Even if you don't make one yourself, it's whatever your state decides for you. And so when we did that episode about how marriage changes your financial rights, I heard from so many people who were like, whoa, that really opened up my eyes and I wish that I had gotten a prenup as well. I didn't realize all of these other things that would come up later. I just thought, oh, whatever I saved for retirement and my stocks and stuff would be protected. But it's actually so much more than that. So I would obviously recommend that if you are not married.

If you are married, I know postnups are a little bit of a gray area, but I know we've talked on the show before about spousal IRA, so can you give us the TLDR of that?

Katie:

Sure. Yeah. This is just kind of one thing that came to mind as an obvious place to start, which is that even if you are listening to this and you are the spouse that is working inside your home, and so you don't have earned income of your own, your spouse, as long as they have earned income, can contribute to what's called a spousal IRA for you. So up to $7,000 a year per person, they have their own IRA, you have an IRA as well that they are funding with their income, but now it's an individual retirement account that is in your name and funded for your benefit.

Henah:

And I believe this is from married filing joint only, right?

Katie:

Yes. You have to be married filing jointly. That's correct. And it's one of those things where if you and your spouse, maybe you have an arrangement where one of you is working outside the home, one of you is working inside the home, and you're both really financially active in your planning and you understand how much money is being saved for retirement, if you were to get divorced someday in a community property state, half of that would be yours anyway. You would be entitled to that.

But I think where this can be useful or is maybe a good reminder is if you are managing money separately such that your spouse is saving for their retirement and contributing to their own retirement accounts, but then is not setting aside additional money for yours, or that gap hasn't been bridged yet, then these are additional funds that may be being spent right now that should be put away in a tax advantaged account for you. And that's what a spousal IRA allows you to do.

Henah:

And it's use it or lose it every year too, right? Like how a Roth IRA is.

Katie:

Yep. So each individual has a $7,000 limit in 2024. It'll probably go up again in 2025, so keep tabs on it. But it is a way for someone who does not have earned income in the eyes of the IRS to benefit from their spouse's earned income and still have retirement savings that are in their own name.

Henah:

So I think that this is all really important to consider if you are married. And then there is kind of a third point that I wanted to add in this week's money story. And it came in from someone named Theresa and she had basically said she was listening to our backlog. Shout out Theresa for doing that because we're always like, who—

Katie:

Supporting our downloads, thank you baby girl.

Henah:

She said, “Katie's point in that episode at the round table about marriage and risks, about what happens when one person stops making income was an excellent one,” your favorite compliment. And then she said, “I'd love to see an episode exploring all the financial implications around someone becoming a stay-at-home parent and maybe interviews with people doing it in different ways. My husband is a stay at-home dad currently who grew up with a mom and I'm the breadwinner who grew up with two working parents at the time. I thought someone staying home when we first got engaged was a little bit dated and unnecessary, and my views have evolved drastically over that time. My 27-year-old self really underestimated the realities of raising kids and what that evolves and how comfortable I would be trusting them to relative strangers. But even though I'm in this situation myself, I've already learned things I didn't consider from your podcast before listening to it.

“It never even crossed my mind that her husband wouldn't be paying into Social security. Thankfully, we're all in an income bracket where that won't really matter to us, but it made me realize it's much more complex than one person wanting to parent more and being able to live without their salary or comparing the cost of a nanny to their salary.”

And then there was another part where she said, “I'd love to hear more about the increase in flipped gender roles where women are outearning their partners and the male partner is a stay-at-home caregiver. There are a lot of social dynamics that make this tough to navigate. For example, people often ask when my husband is going back to work despite the fact that they know I make a ton of money and my kids are only four and one. And they also said how socially isolating being a stay-at-home dad can be. Our first kid was born in 2020, which made it extra tough, but even now it's much harder for my husband to suggest a play date to another kid's mom at the park. And they're always almost always moms or nannies without it being taken the wrong way.

“And we've made friends with other families in particular, but they said, we had a dad mention he didn't even think his wife would be comfortable with him hanging out with other moms on his own since nothing is more romantic than a mixed gender group of parents trying to wrangle five toddlers on balance bikes. But I did think that it was an interesting commentary on how people still view gender roles and husbands being generally untrustworthy.”

Katie:

Oh boy.

Henah:

So much to unpack.

Katie:

So many dynamics. I think that's something that immediately comes to mind. I think that's fascinating for one thing. So thank you so much for writing in to share this because one thing that I have often thought is the fact that primarily it's women who experienced this. This is the lived experience. She even says for most of the people in this group, it's like moms and nannies. My husband's kind of the odd man out as the stay at home parent. But the fact that Congress is majority men, I'm like, until you have either more women who have lived this making laws, or you have more men living this in their day-to-day lives, things aren't going to change. I love that. It's one thing that he's noticing is like, wow, it's actually really isolating to be a stay at home parent. It's like, yeah, it is. And I think that it's really valuable for the other half of society to have these realizations and to see the shortcomings because I'm sure it can be like, don't get me wrong. I'm sure it can be an incredibly fulfilling and wonderful thing, but nothing is without its shortcomings.

And I think that oftentimes the narrative of like, oh, well just stay home. It's going to be so much easier. It'll be great. You're going to love it. It's like, that's not what we're really talking about here. I think that oftentimes the discussion, and particularly I'll see this sometimes from, I'm not going to name drop anybody but male personal finance creators that say the quiet part out loud and we'll be like, your wife should stay home with your kids. It's so much cheaper than childcare. It's just so much better for everybody. And so it's kind of framed as like, see, this is just ladies, am I right? You don't want to leave your house.

Henah:

Are you referring to [redacted]?

Katie:

I'm referring to someone else. This guy had a video go really viral because he was like, guys having a stay-at-home wife will save you $160,000 a year.

Henah:

Yeah, I remember exactly what, wasn't it like a tweet also?

Katie:

It got 10 million views. And it's like, yeah, this guy, he knows what he is doing. He knows what he is doing here. This is not a stay at home parent. This is a very quiet part out loud claim of get the ladies out of the workforce fellows. Is it gay to have a wife who works?

Anyway, but yeah, it's like, I think that as you have men experiencing this and being like, oh wait, I kind of miss talking to other adults or like, oh wait, this is challenging, or oh, I'm the only guy doing, it's like those types of realizations and conversations are so valuable.

I also understand where they're coming from with I overestimated how comfortable I would be having someone else take care of them. I'm like, I completely get that. If I go out of town and someone else is coming over to feed Sam, I am texting, asking for photos and updates. I'm like, this is bad. This is a cat. I can totally see where that could be really, really anxiety producing. So yeah, I appreciate the story from Theresa about they've kind of inverted the norm and the challenges that they're facing from doing.

And I appreciate Andrea writing in to tell her story too. I guess this week the question was a little bit of a story in that way, but I think that what always surprises me whenever we talk about this topic is how many people will respond and basically, yeah, that was what happened to my mom, or yeah, that was what happened in my house and now we are dealing with the consequences. So I think we think about changes to the status quo as though it would be risky, but the current status quo is already really risky. It's already producing really adverse outcomes for large portions of society who end up kind of without a safety net later in life.

So thank you both for writing in, and that is all for this week's Rich Girl Roundup. We will see you on Wednesday to talk about paid labor.