When discussing finances and divorce, most conversations focus on the negative effects divorce can have on your financial freedom and help. However, there are many ways you can financially benefit from divorce.
What Are the Financial Benefits of Getting Divorced?
While divorce can come at a high price and can affect multiple areas of your life, there are some silver linings. Some of the financial benefits of divorce include:
- Having early access to a retirement fund. A divorce is an opportunity to access retirement funds early without incurring a penalty. Thanks to something known as a qualified domestic relations order, individuals are able to withdraw money and use it for the purposes of their settlement with no additional 10% fee, though income tax may still apply if not reinvested in an IRA. Before withdrawing funds or taking this route, you should speak with an attorney and a financial advisor, as this can be a risky move.
- Gaining better investment returns (potentially). A 2017 study by Fidelity Investments (about women and investing) found that women were less likely to fully invest their equities but earned marginally better gains than men. Divorcing women may lead to better interest returns and increased opportunities to control their investment portfolios and retirement planning.
- Having more control over your finances. Divorce can represent a newfound sense of financial freedom and autonomy, allowing individuals to make their own decisions about how best to manage money, free from the pressures that come with negotiating spending priorities in marriage. For some people, this represents an opportunity for growth and prosperity. As an example, if you and your spouse had different spending habits, you can now, as the “saver,” put more money into your retirement savings.
- Changing your financial priorities. As your divorce can still affect your finances, you can take time to reconsider your financial priorities and goals.
- Potentially having more financial aid options for your children. Divorce can present financial challenges for children, but when it comes to college aid they may be in a better position. The Free Application for Federal Student Aid requires only the custodial parent’s finances, although any alimony and child support from the non-custodial must also be included on FAFSA forms.
- Gaining certain Social Security benefits. As a divorcee, you may be eligible for Social Security spousal benefits upon retirement if your marriage lasted ten years or longer and the other spouse is at least 62. Unlike current spouses who must wait for their husband or wife to claim benefits first in order to receive payments, these rules do not apply when filing as a divorced individual.
High-Quality Divorce Services
Backed by over 35 years of experience, Dale L. Bernstein, Chartered Law Office helps our clients smoothly navigate the divorce process. If you are getting divorced, our attorney can take time to discuss your concerns, legal and financial, and help you develop a case strategy to address them. Our firm offers forensic accounting services as they can provide a range of financial assistance in divorce and family law matters, including advising you on how certain decisions will impact your financial future.
Learn more about our divorce services by calling (727) 862-4411 or reaching out online
