Divorce is a major life event with significant financial implications. 35-50% of first marriages in the U.S. end in divorce. Post-divorce individuals need a 30% increase in income to maintain the same living standard.
FINANCIAL ISSUES CAUSED BY DIVORCE
- Loss of health care coverage
- Increase in childcare costs
- Home ownership issues
- Negative impact on credit scores
- Dramatic increase in housing costs
- Impact on retirement plans
- Increased income tax
- Legal fees and court costs
IMPACTS ON CREDIT SCORE
Changing your marital status doesn’t affect your credit report.
But handling joint accounts with your ex-spouse can impact both credit reports.
WAYS TO DEAL WITH HOME OWNERSHIP
- Refinance your mortgage - Refinancing releases a spouse from responsibility when their name is removed from the loan.
- Sell your home - Sell your home and split the profits. Be sure to consider realtor commissions, capital gains, etc.
- Buy equity back from your ex - Buy out your spouse’s share. Have $100,000 in equity? You’ll need $50,000 (assuming a 50/50 split)
IMPACTS ON RETIREMENT
Retirement assets are usually divided, but legal and tax considerations apply. Complications can increase if you’re over 50. Consult your CPA, attorney, and investment advisor for guidance.
PRO TIP
Seeking professional help will make the divorce process easier to navigate.
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