Divorce is often devastating, but there are a few financial silver linings.
From the cost of the lawyer to the loss of a spouse’s income, divorce often comes at a high price. What’s more, spouses may walk away from the proceedings with significantly fewer assets and retirement savings. That’s not to mention the emotional toll of the process.
“At the end of the day, divorce is terrible,” says David Hays, president of Comprehensive Financial Consultants in Bloomington, Indiana.
However, that doesn’t mean the news is all bad. While not a reason to run out and get a divorce, here’s a look at seven financial benefits that could make a sad situation seem a little better.
1. Easier budgeting and greater control over money. The end of a marriage can mean the end of fights over money. There is no more struggle over which categories get priority in the budget; no more evenings spent cajoling or pleading with a spouse to rein in spending. “On the other side of divorce is some freedom,” says Elijah Kovar, a partner with Great Waters Financial in the Richfield suburb of Minneapolis.
Nancy Hetrick, a senior financial advisor with Better Money Decisions in Phoenix, can attest to that. In the six months after her divorce to a spendthrift husband, she accumulated $20,000 in savings, thanks to her ability to set her own budgeting priorities. Meanwhile, her ex racked up tens of thousands in debt over the same period. “Typically, it’s going to be positive for one person, not the other,” she says. 2. Early access to a retirement fund, penalty-free. A divorce is one of the few times a person can pull money out of a retirement account early and not pay an early withdrawal penalty. When an agreement known as a qualified domestic relations order is reached as part of a divorce, it allows for an early withdrawal from the account. This money is exempt from the typical 10 percent penalty assessed to those younger than age 59 1/2, although income tax still needs to be paid if the money is not rolled into an IRA.
Cashing out part of a retirement account can be a risky move, but it gives the newly divorced some options they may not otherwise have. “You can really get someone in a much better cash-flow position,” Hetrick says of the smart use of that money.
Ric Edelman, founder of Edelman Financial Services, cautions people not to be too hasty about withdrawing money from an account. He notes that sometimes, in amicable divorces, people try to split the balance of a retirement fund without a qualified domestic relations order. That can be an expensive mistake. “Don’t make any decisions without the advice of an attorney and a financial planner,” he says.
Think of it as a financial decision, not an emotional one.
3. Potentially better investment returns. Divorce could mean better investment returns, at least for women, says Mela Garber, principal at accounting firm Anchin Block and Anchin in New York City. “Men usually take a more aggressive approach to investments and take more risks,” she says. Her observation is backed up by studies such as a 2017 analysis by Fidelity Investments that found women were less likely to fully invest in equities and earned marginally better gains than men. After a divorce, women have the opportunity to take over their own retirement planning, which could be a financial positive in the long run.
4. More college financial aid for the kids. Divorce can be difficult for children, but there is one place where they come out ahead: college financial aid. The Free Application for Federal Student Aid only requires financial information from the custodial parent rather than both parents. However, child support and alimony received from the non-custodial parent must be included on the FAFSA. “We’ve structured some really creative settlements to minimize the income of one parent,” Hetrick says. Additional financial aid is a little-known benefit of divorce, but one that is significant. 5. Social Security perks for older divorcees. Divorced spouses may be eligible to file for Social Security spousal benefits at retirement. You’re entitled to these benefits if you were married to your spouse for at least 10 years. “The ex doesn’t even know you’re doing it,” Edelman says. “It doesn’t have an impact on the benefits the ex will receive.”
If you were 62 by Jan. 1, 2016, you can file a restricted application for Social Security spousal benefits once you hit full retirement age. No longer allowed for younger workers, this application will allow you to receive half your spouse’s benefit while you defer your own and let it grow until age 70. For married couples, this only works if a person’s spouse has already started his or her benefit. However, for divorced spouses, the rules are different. “When divorced, you don’t have to wait until your ex turns on Social Security,” Kovar says.
6. Opportunity to reset financial priorities. While people are sometimes resentful of lifestyle changes necessitated by divorce, finance experts say the opportunity to rethink priorities and start fresh can be a positive. Even major adjustments, like giving up a family home, can be beneficial in the long run. “Sometimes it’s financially better to have a smaller house or apartment,” Garber says.
7. A better bottom line. As Hetrick discovered, divorce doesn’t have to mean a depleted bank account. Even on a lower income, divorced people can build wealth by making smart use of their resources.
The reality is not everyone’s financial situation will improve with divorce, but some people are surprised to learn that it does. “One [client] said, I don’t know why I have so much money now,” Hays says.
Life during and after a divorce can be crippling, but there are many reasons to stay positive. Psychologist Michael Jolkovski posed the question to me: Why should there be any trouble holding one's head up after a divorce? 'Shame is a big part of why divorce is always more painful and disruptive than anyone anticipates,' Jolkovski points out. 'At some level, a divorce feels like a giant failure in one of the biggest projects in life.' It takes a lot of emotional work to get through these feelings and to feel better again. But, we believe in you. You can do it. Read 10 reasons why you should stay positive after a divorce -- they may help you along the way...
10 . What is Marriage, Anyway? "I would encourage your readers to reflect on how they built up their understanding of what a marriage is. This begins very early in childhood, in play with dolls and drawings and make-believe with friends, which often center on some notion of family," Jolkovski explains. "These notions are running quietly in the background in adults as unconscious assumptions, which can have a brutal collision with adult reality. This reality includes facts of life such as that people come to marriage with wildly differing understandings of what it is all about; that we cannot make anyone love us, no matter how wonderful we try to be, and that none of us has that much control over the way life plays out." Instead of focusing on the failed marriage, Jolkovski suggests to realize your resilience and flexibility.
9. You Did Something for You Peggie Arvidson has been divorced twice, and she admits it's not easy. "I guess the best reason for holding your head up, though, is knowing that you did something for you. Not in the selfish, 'It's all about me' way or in the way of making him a bad guy and you look like the victim, but rather I could hold my head up knowing that I had done a lot of inner work to make a decision that was harder than most people think and I was going to honor me," she explains. Arvidson also points out that in the process, you'll come to trust yourself more, realize that you're strong enough to take a stand, and understand that you learned something along the way.
8. Your License to Reinvent Faith McKinney, who's been divorced twice and has been remarried now for seven years, thinks the new start is a positive change. "The great thing about divorce is that it is a license to reinvent yourself without your ex-husband's input or criticism," she explains. "I learned to trust myself and that it's OK to enjoy myself." McKinney began to make mistakes without fear of reprisal or retaliation. "Even though it is very difficult emotionally, financially and socially, I survived. Twice."
7. Anything is Possible For Emma, blogger of DivorcedBefore30.com, the divorce gave her a sense of invincibility. "You'll have good days and atrociously bad days, but on the good days, you'll see that anything is possible," she explains. "People are, for the most part, gracious. You will have fun again as soon as you give yourself permission to let go."
6. Here's to Good Family and Friends Don't forget about the people on your team! "Your friends and family will be there to help you pick up the pieces -- let them," Emma advises. The love will have your head up in no time. You just have to stop and smell the roses (and by "smell the roses," we mean recognize the people that love you).
5. Looking Good For those getting divorced, a transformation is inevitable -- that's something to look forward to, according to Andrea Gross, lifestyle coach who's writing a book called, When You're Ready. She's happily divorced and has never been happier. "There were days and even weeks and months that I could barely function. Now, only one year later, I look and feel better than I did 10 years ago." People ask Gross what her secrets are, and that is the reason she started her practice. The secret? "I have found inner happiness and strength -- I am my authentic, sexy, confident self again."
4. Letting Go It's grand -- it really is. "If you gave it your best shot, and you know it's over, don't waste time in resentment and anger -- it's self-destructive. Let go," says Tina Tessina, a.k.a. "Dr. Romance" and a licensed psychotherapist. "Do your grieving, cry, write in your journal and talk about it alone or with a trusted friend." You can even have a fun "letting go" ceremony with close friends, and say goodbye to your married life, she suggests.
3. Relief For Ron Thomson, who has been divorced twice with no animosity, fighting or children, believes one reason to keep your head up is because of relief. Although both of his ex-wives were the ones who initiated the breakup and wanted the divorce, Thomson did keep his head up. "Whatever problems we were experiencing are now over," he recalls. "It hits you later that your family is gone and you are alone." At either case, you get to start over again, Thomson points out. "To me the women lost out on a good man. That's a good reason to hold your head up," he adds.
2. When You Put Your Kids First Sometimes taking the higher road is another way to keep your head up. Don't be negative -- think of the transition for the kids. "You can keep your head up if you manage to put your own needs aside for the kids. I don't mean stay married, but, during divorce and beyond, put the kids first," says Lauren Whitman, author of Austin's Best Idea Ever. "When my (now) husband and I were first together, he missed his daughter terribly. I encouraged him to stay in touch with his daughter daily and to tell her that he loved her often. I think he felt supported in keeping that connection strong since I took that position."
1. Look to the Future Alicia Rinaldi, a family attorney who has also had to mediate in a multitude of family law matters, reminds us not to forget about what's to come. "I'm not a trained therapist or social worker, but I try to encourage my clients to see past the present so that together we can get them to a better place in the future," she says. "While the stress of experiencing a divorce or strife in your family life is certainly great, keeping an eye towards the future helps put things in perspective so that setbacks don't derail the case." The transition of divorce can be extremely rewarding -- being in a toxic relationship can stifle a person's dreams and expressions, but separation from it can also be a stepping stone to teach you what you need out of a partner, and what you want out of life. Source: https://www.sheknows.com/love-and-sex/articles/813740/10-reasons-to-stay-positive-after-a-divorce-1
I’m a child of divorce. Have you read the studies about me? Did you hear somewhere that I had difficulties in math class and/or severe emotional problems? Do you assume my teenage self ran away from home, used drugs and got pregnant? You’d be wrong on all accounts. Except, of course, for the stat I didn’t mention above... the one about my higher risk of divorce. I am a child of divorce who has been divorced. But I don’t blame my divorced parents for that one. In fact, I’m rather grateful. I was thirteen when my parents separated. At that point in my life, I was just becoming aware of love and romance, and for a time I was a little angry at my mom and dad for giving up on something so wonderful. I’ll never give up like they did, I thought to myself. I’ll never get divorced. Funny thing, my parents’ divorce wasn’t so terrible. Overall, it was a rather good thing for my family. I gained some pseudo-stepsiblings in the process, and I learned about the ways relationships can change. I saw my parents become better parents, and even friends, because they didn’t have to be domestic partners. I began to see divorce not as a problem itself, but as a much-needed solution to a problem. As time passed, I was able to appreciate the ways in which my life had improved because of the divorce. I also saw my mom and dad grow as individuals, and I developed closer relationships with each of them as a result of our family structure. So, what impact has all of this had on my adult relationships? I’m OK with divorce. We’re all human beings, learning and growing as we walk along the path of life. Sometimes part of our personal growth involves ending relationships that no longer serve us, and that’s OK. Like I said, I’m now divorced myself. My ex and I were able to be honest about the state of our relationship, and we made the difficult choice to do what was best for both of us. I think of divorce as a shared goal. So many people think of divorce in terms of war: where two sides face off and fight. That wasn’t the model I grew up with, thus I don’t know how to play that game. I believe the process of ending a relationship (like the process of building one) takes cooperation, communication and compromise. I believe that families should evolve, not dissolve, through the process. As a child of divorce, I experienced far more gains than losses. I gained a second home and an extended family. I gained new friends in new places, new adventures and new relationships. These days I firmly believe that divorce should be viewed as an evolutionary process for families. Seeing dissolution sets everyone up for disappointment. I’m acutely aware of my personal health in relationships. I know my needs, and I know my boundaries. I believe that compromises are necessary, but I’m not willing to sacrifice my physical or mental health in order to save a relationship. When I consider new partners, I think about how what it would be like to separate from them. As I mentioned before, I think the end of a relationship is an act of teamwork. Therefore, I don’t want to get involved with anyone who wouldn’t work with me through that process if necessary. I’ve no interest in men who’ve indulged in dirty divorce tricks, nor those who are adamantly against divorce. I am a child of divorce. But I don’t think of myself as broken. I don’t believe my childhood was lacking. I think my parents made a difficult choice which turned out to be the best decision for our family, and I benefitted from that. Nowadays, I see myself as stronger, more open-minded and with greater self-awareness as a result. Source: https://www.huffingtonpost.com/divorced-moms/5-ways-my-parents-divorce_b_6030488.html
Kids don't have to lose out when there's a divorce. Bronnie Marquardt talks to parents who've found ways to help their kids thrive.
Once upon a time, divorce was the worst thing that could happen to a family. Children of divorced parents were said to come from ‘broken homes’. Relationships were described as having been torn asunder and irretrievably broken down. Sensing a pattern here?
But what if divorced homes weren’t broken at all and children were, in fact, thriving? What if parents were happily living apart and setting a good example to children, who were secure in the knowledge that they are loved and valued by both parents? Because in some cases, that is what the modern version of divorce means. Kids can flourish Of course, not every divorce is the same and, unfortunately, there are still those adults who can’t stand the sight of each other let alone parent the children they once produced out of love. And it’s true that children will always suffer when the two people they love most in the world announce they will no longer be living in the same house anymore. But with care, honesty and give and take, kids get over that hurt and actually flourish once they see parents happy. Children also settle and feel secure as new boundaries are set and routines re-established. The benefits of single parenting “I used to think single parenting would be awful,” says Sarah, a mum of two. “But my husband was always away anyway, so I did most of the parenting myself. At least this way, he spends quality time with the kids when it’s his time to have them – and I actually get a break. And we don’t fight anymore.” Indeed, many single parents cite the freedom to do their own thing when the children are with the other parent as the greatest benefit of divorce and separation – whether it to be to concentrate on career or study, a new relationship, exercise, or even pleasurable sleep-ins. “I love taking up all of the bed, staying up late watching crap TV, and not having any little people coming in to wake me up early,” says Sarah. “That’s not to say I don’t miss the children – I just enjoy the freedom of having time to myself. I never got a break before." Improving relationships? Jayne says her children gained a father who is engaged and involved more than he was before the divorce. “We do 50 percent care, so he must do everything for them that I must do – cooking, cleaning, packing their lunches etc.,” she says.
“I think this will be important for them as they view gender roles in the future. I know some men do this in a marriage but it wasn’t the case in mine. I think their relationship with him has grown because of this.” Single dad Bill agrees. “Our son is probably happier than when we were together. And we’ve (he and his ex) become good friends.” Part of the reason for the harmony is that adults living together no longer argue about parenting methods, finances and the mundane matters of family life, like toilet seats and toothpaste tubes. “Once you’re single you have freedom to do what you want, when you want, without have to seek permission from anyone, parenting your way without constant compromise,” says Catherine, a mum of five. “Financially you are your own master. And while money is a constant worry, you know exactly how much you have and where it’s going. You are the master of your own destiny. “In terms of the children, I think they have become very resilient and flexible little people due to the many changes in their lives.” Not so different Far from feeling ‘left out’ or ‘different’ as they may have in the bad old days before divorce was no-fault, my own children appear to have blossomed. They enjoy having two sets of homes, holidays and special occasions like birthdays and Christmas. During the recent school holidays, they spent a week in Darwin with their dad and his partner – a part of Australia they never would have been likely to see prior to our split. They came back full of tales of crocodiles , and it meant they were satisfied doing something a bit more relaxed with me here. They know that money is tighter at my home than their dad’s and they accept that; just as they understand that our parenting styles are different. For them, it’s like getting the best of both worlds. “Why didn’t you do it (break-up) earlier?” my son asked one day. “It’s better like this.” More happiness, less stress That’s not to say that I recommend divorce; in fact, just the opposite. However, the effects of modern-day divorce are not all bad, particularly on kids. A new start and a good example to children is particularly important if the previous relationship was violent, abusive or even just hostile, as a way of showing our kids the way we expect to be treated. People who leave an unhappy relationship give themselves the chance to find happiness. They are much less stressed than those who stay together due to fear, finances or the sake of the children. In turn, kids do better when they are not trapped in a family where Mum and Dad are constantly yelling at each other. Even if that means living apart. Source: https://www.kidspot.com.au/parenting/parenthood/divorce-and-separation/why-divorce-doesnt-have-to-be-bad-for-kids/news-story/71545e45b75073ab1911d6079d355085
