In a dual income household, divorce essentially reduces your income in half. This can have a devastating impact on your financial future. According to Marripedia, “Economically, women suffer more from divorce than men. Though child support helps a woman avoid poverty after divorce, it does not help as much as most think. Over 35 percent of custodial mothers receiving child support were impoverished 16-18 months following the divorce.”
Here are some of the other ways that divorce can impact you financially.
Division of Assets
Nine states require an equal division of assets. This means that property that is owned is valued, and needs to be divided up between both parties. The majority of states require an equitable division of assets. The court will decide on how property is divided. This is based on financial means and other factors that may not be tangible. This includes any pain and suffering that may result from the end of the marriage. In order to protect yourself, you need to speak to a family law lawyer. They can help you to get a fair division of assets.
Alimony or Child Support Payments
Depending on your spouse’s financial position, you may be required to make alimony payments. This will reduce the amount of income that you have to work with each month. It can cause you to have to reevaluate your financial situation. If there are children involved in the relationship, you may be required to pay child support. This amount is generally determined by the court based on you and your spouse’s financial obligations. Another factor is the type of custody that is determined.
Retirement Accounts
Money that was invested during your marriage may also be required to be counted towards the division of assets. This can impair your ability to retire comfortably. In community property states, your spouse would get half of your retirement savings. You would either have to take out that amount from the account, or give them money through some other means. According to a Today.com article, “people who got and stayed married each had about double the wealth of single people who never married. Together, the couple’s wealth was four times that of a single person’s… married people see stronger financial advantages than just a doubling of wealth. According to the Census Bureau, in 2010 the median net worth for a married couple between the ages of 55 and 64 was $261,405. That compares to $71,428 for a man heading a household, and $39,043 for a woman heading a household. Of course, those major wealth effects are for marriages that worked out. Zagorsky’s research found that those who got divorced tended to see their wealth fall dramatically, leaving them worse off than those who were single and had never married.”
Repayments of Debt
Debt that was incurred during the marriage is the responsibility of both parties. In the division of assets phase, this will be taken into consideration. You may find yourself having to sell your home or car in order to settle these debts. Having a trustworthy family lawyer can help you through this process. There are lots of financial pitfalls that can occur with the dissolution of a marriage. You need to have someone that is on your side.
The biggest impact of divorce is on your family. There are financial impacts that also need to be considered. Know your rights, and don’t give them up willingly.
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- 5 Financial Tips to Keep Your Children Fed While You’re Out of Work
