If you’re married, nothing can ruin your finances worse than a divorce. Of course, there are the lawyer fees involved. A divorce can run $15,000 or even more, depending on the complexity. Then there is the division of assets and debts to take into consideration. A large estate can involve hundreds of thousands or even millions of dollars.
Depending on your age, a divorce can negatively impact your retirement plans. A divorce in your 20s, 30s and 40s likely won’t cause too much damage. You still have enough time to rebound and save up for retirement. However, once you hit 50, you are entering gray divorce territory. By that age, retirement is just around the corner, making it harder to reach your financial goals.
Gray divorces, unfortunately, are on the rise. Marriages are no longer guaranteed once you reach a certain milestone. Couples who have been married for 20, 30 or even 40 years have been filing for divorce at rates higher than average. The rate has been climbing since the 1990s, as divorce rates in other age groups have declined.
In a gray divorce, there’s a lot of pressure to get things right. A divorce will negatively impact one’s finances, no matter what. Very few people come out ahead in a divorce. In fact, on average, a man can see his standard of living decline by 21%. Women fare much worse. Their standard of living declines by 45%, on average.
Why does this happen? In many divorces, men keep the retirement accounts, while women remain in the marital home. While they may feel more stable and secure there, keeping the house does little to fund their retirement, Instead, they are saddled with taxes and maintenance costs, while the man often downsizes and watches his earnings in his accounts grow.
Women can also lose out if they are not working much before a divorce. They can lose out on Social Security benefits. They can also lose their health insurance, if they were covered under their spouse’s employer. Private health coverage is an option, but it can be more costly, costing hundreds more dollars each month.
Therefore, it is up to women to make smart decisions when they divorce. Having a financial adviser and a lawyer on their side can make all the difference.
If you’re not happily married, how long should you continue to stay miserable before getting divorced? Some couples stay together for the children, but once the children are grown, it may be too late. With retirement around the corner, a couple can set themselves up for a financial mess.
There is never a good time to divorce, but the earlier you do it, the more time you have to financially recover by retirement. Don’t end up making mistakes with your hard-earned money.
The Columbia divorce lawyers at the Law Offices of Todd K. Mohink, P.A. can help you get the assets you need to retire with less stress. We have two offices to serve you. Schedule a consultation by filling out the online form or calling (410) 774-5987.
7310 Ritchie Highway, Suite 910
Glen Burnie, MD 21061
30 Corporate Center
10440 Little Patuxent Parkway,
Columbia, MD 21044