A 2018 survey by The Harris Poll with 1,400 participants shows that over a third of wedded or partnered couples agree that money stresses their relationships the most. Some clearly opine that financial issues could turn a blissful home into a divorce case.
Money is one of the leading causes of marital strife. Divorce also has its financial woes as just-divorced individuals may battle with shrunk income to cover their towering bills. However, the situation is not entirely terrible; this article discusses seven silver linings divorcees can use to soothe their new lives.
Quicker Budgeting and Greater Control Over Funds
Divorce may mean an end to crises over finances. You will no longer have someone to struggle with when making your financial plans, and you will no longer have cause to plead with a partner endlessly to achieve your spending aim.
Divorce grants you much-needed freedom from financial disagreements. If your ex was a spendthrift, divorce will allow you to jack up your savings and contribute meaningfully to retirement funds. It will also put an end to working hard for your partner to divert your money to non-essentials, like debt payment or traveling.
Likely Improved Investment Returns
Marriage dissolution could translate to improved investment returns, especially for women. Men often choose more aggressive investment strategies.
A divorced woman managing her portfolio could have weathered the turbulent year of COVID-19 better than married women whose husbands were suggesting aggressive investment ideas. A 2017 Fidelity Investments analysis shows that women were unlikely to entirely invest in equities and made marginally better profits than men.
A woman can take over her retirement planning, which could eventually bolster her finances.
Social Security Benefits for Older Divorcees
Divorced couples may be eligible to institute Social Security Spousal Benefits when they retire. You can get these perks if you have been married to your partner for at least ten years and they have clocked 62. Unlike married spouses, divorcees do not have to wait for their partners to claim benefits to get spousal checks.
“Divorcees do not wait for their estranged partners to turn on Social Security. It is worth noting that claiming spousal benefits does not influence your ex’s monthly payment or that of their present spouse if they have remarried,” says family law attorney Matt Towson of Towson Law Firm, PLLC.
Increased College Financial Help for Your Children
Despite the unimaginably heavy toll of divorce on kids, one of the few ways they tend to benefit from it is college financial help. They only need the financial details of the custodial parent for the Free Application for Federal Student Aid (FAFSA). However, they must include the alimony and child support from the non-custodial parent on the FAFSA.
Divorce could better position your kid for financial help. More financial help is a less-known merit of divorce, but it is highly significant.
Opportunity to Redefine Financial Priorities
While individuals sometimes detest divorce-orchestrated lifestyle changes, finance experts opine that the chance to re-strategize and redefine priorities is favorable. Even substantial changes, such as surrendering a family house, can be eventually beneficial.
It is sometimes financially wise to live in a smaller apartment or house due to the expensive maintenance costs of large properties. Such expenses can negatively affect your cash flow. Hence, divorce can be an opportunity to downsize to a home you can conveniently manage.
Early Access to a Penalty-Free Retirement Fund
Divorce offers several ways to quickly withdraw money from a retirement account without paying an early withdrawal penalty. One way is to reach a “qualified domestic relations order” agreement with your estranged partner.
You do not pay the typical 10 percent penalty on the money, as the authorities charge those less than 60 years old. However, you must still pay income tax if you do not roll the funds into an IRA.
It can be risky to withdraw part of a retirement account. However, it offers newly divorced persons options they may not otherwise be eligible for. Cautiously use the money—channel it to a retirement cause and do not waste it.
Bottom Line
A divorce does not necessarily mean a negatively affected bank account. Divorced individuals can smartly use their resources to build wealth even with lower earnings. You can start afresh by creating a strategic game plan that helps you win massively.
Realistically, everyone’s finances cannot turn around with divorce, but it surprisingly does for some. Never rush into a divorce, as the consequences can be unimaginable. However, do not despair if you find yourself in a crumbling home. You can use the revelations in this piece to come out victoriously.
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