You've probably heard the often quoted "half of all marriages end in divorce" phrase.
According to data it is a coin of phrase not entirely true, until Covid that is!
Couples, families, people, were forced to stay inside and see each other 24 hours a day. Homeschooling struck, finances reduced, health concerns rose and interest in divorces skyrocketed worldwide, with newly married couples being the most likely to file for divorce.
What Divorce Can Do To Your Finances!
The reality is that divorce affects men and women financially in different ways. Women usually suffer more than men when divorce occurs, particularly if they spent time taking care of children, or elderly parents, instead of going to the office during those prime working years.
Here are some factors that will likely affect you whilst going through a divorce.
Drop In Household Finances!
Obviously, the amount of money you bring into your household will drop after divorce.
In 69% of heterosexual marriages, husbands make more money than their wives meaning, women’s total household income will drop more than their ex's.
Women's household income generally falls by 41% following divorce or separation after aged 50, In contrast to men’s household income dropping by only 23%. Because women live five years longer than men, that dip in income can result in serious financial consequences, including the inability to retire at a desired age.
Both parties become considerably poorer!
Loss Of Retirement Savings!
Individuals who would normally live off of retirement savings together must divide assets and pay off debts prior to divorce, which leaves assets that normally would have been accumulated together, divided.
Any funds contributed to an account during marriage is marital property and subject to division unless a valid prenuptial agreement was put in place. However, it’s not always a 50/50 division. Judges can determine the actual terms of the split, and in a community of property state, it's important to know that an ex might actually "get" less than anticipated.
No matter what happens, that still leaves less in the retirement pot for two separate households.
Financial Surprises Can Crop Up!
Sometimes health insurance costs, poor retirement planning and credit card debt can show up as a complete surprise. When one partner "takes care" of all the finances, the other could have been left completely in the dark about the actual state of the couple's finances.
Do you know the actual size of your marital debt, including home loan, auto debt, credit card debt, personal loans and student loans? It could end up being a staggering amount — more than you'd anticipated.
The Cost Of Getting A Divorce Will Shock You!
The cost of getting a divorce in the first place can put a major dent in your financial situation.
A divorce is expensive not only in terms of money but emotionally and personally too. The numbers can go into figures that you never imagined with court filing costs, mediation fees, costs for evaluations such as counseling, "guardian ad litem" fees and other expenses, which may depend on your specific situation.
Credit Scores Can Drop!
Unpaid credit or outstanding home loan payments can affect your credit score if your ex doesn't hold up to his or her share of the bargain. Legally, you’ll still be responsible for each other’s portion of the debt if the other person doesn't pay it.
Not fixing your credit can result in your inability to qualify for loans in the future. For example, if you want to qualify for a home loan on your own, your ex's inability to make on-time payments can hurt your credit score and prohibit you from qualifying for credit.
Divorce Settlement Taxes - Are You Prepared?
What tax issues can come up? Find out in advance, because you don't want to be surprised at tax time.
Kids Might Not Attend Varsity, Affecting Their Own Future Earnings Someday!
This might not seem like an obvious add-in to the list, but your kids can also become affected besides just the normal ways in which kids "are affected by divorce."
Children may not be able to attend university based on the negative financial issues that come from divorce, not to mention the behavioral changes that may occur, increasing costs for both parties.
Know Your Options and Consult the Right Experts
If you think you might want to get a pandemic-induced divorce (or even if you knew before the pandemic that you were headed toward Splitsville), it's important to consult an accountant or tax attorney. You should know everything you can about splitting your retirement savings, the cost of divorce and how your assets and expenses might get divided up.
In addition, post-divorce, you might believe that you'll get more money for child support and/or maintenance or that it will last longer than it actually will. Become as informed as possible so you understand all the financial implications before, during and after divorce.
Is It Worth It Financially And Emotionally?
Only you can decide if the marriage is no longer worth fighting for and if you have the strength to deal with the loss, on all fronts, and the destruction that divorce has to offer.
Never make emotional decisions! Let the dust settle, clear the haze, communicate, and if there is the slightest chance of a reconciliation - do that rather. Work together, put Ego aside and think of the road ahead for all concerned.
The grass is not greener on the other side - It's green where you water and maintain it...