For Michigan couples who have reached the end of the road in their marriage, there are a seemingly endless number of factors that will come to the forefront in the divorce. While children are a primary concern, there is no doubt that finances will play a prominent role in the case and the future. As people contend with radical life changes in the current national situation, it has led to a spike in divorce. Understanding how their finances can be impacted and devising strategies to mitigate those challenges is imperative from the start.
The financial implications of a divorce can be life-changing
Although the income disparity between women and men is supposed to be closing, there is still a gap. Women are prone to facing greater financial turmoil in a divorce, especially if they are also caring for children. After a divorce, household income will decline since there will no longer be two wage earners. For women older than 50, their income tends to fall by more than 40%. For men, that is 23%. Retirement savings can also be damaged. Because people 50 and older are divorcing more frequently with the rate doubling and people over 65 have seen their rates triple making retirement is a worry.
Unexpected costs can crop up. That includes health care expenses, debt that might not have been known to both spouses and a lack of retirement savings. It is wise to remember that 401(k) contributions will be categorized as marital property and will be split during property division. When a person is suddenly fending for him or herself financially, the credit score takes on greater relevance. This can be critical when trying to buy a home. Adapting to the new normal with paying taxes individually instead of as a couple may yield surprises.
Preparation is key when considering a divorce
Nearly 40% of marriages in the U.S. end in divorce. Since early 2020, there has been a notable increase of one-third in people seeking information about or moving forward with a divorce with relatively new marriages most vulnerable. This is believed to be because people who were previously unaware that they had marital strife or were ignoring marital dissatisfaction saw their problems come to a head because they were forced to spend more time together. The financial component is a major consideration in a divorce. For that and more, it is beneficial to have experienced assistance from the start.