Does Divorce Have Financial Benefits?
There is no question that many divorced men and women are shocked by how difficult it is to support themselves when single. This is especially true for people who have spent decades married. When single, a person must fully pay for the full cost of housing, utilities, food, transportation, and other expenses. There is no one else to split the costs with.
However, as an interesting U.S. News & World Report story reminds us, there are some financial benefits to getting divorced. Our Media divorce lawyer considers some of the more compelling.
More Financial Control
Many people are married to a spouse who is a spendthrift. Instead of properly budgeting for retirement and savings, this husband or wife blows money on luxuries and gifts without any concern for how to pay bills.
Once divorced, you take total control of what happens to your money. If you want to funnel more into your retirement account, great. If you want to build up an emergency fund, you have total power. If your spouse was holding you back, then you are finally free to start accumulating wealth now that you are single.
Different Investment Decisions
Your ex might have invested money too aggressively or too timidly, which can hurt you. For example, your husband might have sunk everything into equities, which tank during the recession, potentially costing you money. On the other hand, your wife might have been terrified of equities and only invested in bonds or money market accounts, depriving you of growth.
When divorced, you can choose an investment strategy that works for you. This means you could possibly maximize gains by creating a different investment portfolio.
More Financial Aid for Children
College is expensive and many parents are trying to help their children out by paying for tuition and/or room and board. If your child is applying for financial aid, then they might qualify for more aid now that you are divorced. The reason is simple: The Free Application for Federal Student Aid (FAFSA) which practically all students fill out requires only information about the custodial parent’s income.
Of course, you must report alimony and child support received. But the divorce might have reduced your income enough that your child gets more aid, including grants which do not need to be paid back.
Faster Access to Social Security Benefits
It’s a little known feature of the Social Security system that divorcees can claim benefits based on what their ex earned. There are some requirements—you must have turned at least 62 and your marriage must have lasted at least 10 years.
However, if you are divorced, you can still access spousal benefits even if your ex has not yet retired. This is different than if you remained married—you would only be able to claim a spousal benefit when your husband or wife actually starts to draw benefits.
Access to Medicaid for Long-Term Care
The cost of skilled nursing care is through the roof. Fortunately, Medicaid will pay for this care, but only once you have spent down your resources. A married person’s joint assets could delay Medicaid eligibility, but a divorced person should have fewer assets to their name.
Divorce is Hard—We Can Ease the Process
Barbara Flum Stein & Associates has helped men and women understand how divorce will affect them. To schedule a consultation with a Delaware County divorce lawyer, please contact us today.