Can divorce have financial benefits? Anyone who is thinking about filing for divorce in Michigan has probably heard about the potential financial consequences. For younger people who get divorced, it is easier to get back on track financially, yet divorce does often take a toll on finances. For example, getting divorced means that you will no longer be splitting the costs of a mortgage (or rent payment) and bills, and the division of marital property can leave you with less savings and fewer investments. The financial difficulties of divorce can be more pronounced when couples get divorced after retirement. You might have read about how, for instance, “gray divorce” can leave retirees with a limited amount of post-retirement income, resulting in a need to return to the workforce.
While divorce can result in financial difficulties that are either temporary or long-term for some people, there are also some financial benefits of divorce. An article in U.S. News & World Report discusses some of the little-known financial benefits of getting divorced. We will say more about some of the ways that getting divorced can actually help with financial issues.
Freedom to Manage Your Finances
One of the financial benefits of divorce is the freedom to manage your finances. Often, married couples share accounts and make joint decisions about how money will be spent. Married couples also tend to determine together what a family budget will look like. After your divorce, you can decide for yourself how to prioritize a budget and how money will be spent.
Access to Retirement Funds
In most situations, if you take an early withdrawal from your retirement account, you will pay a substantial penalty. However, getting divorced may allow you to take an early withdrawal from your retirement account without paying a penalty. If you enter into a qualified domestic relations order (QDRO) in your divorce, you may be allowed to take an early withdrawal from your retirement account without the percentage fee that typically attaches. You should keep in mind, however, that you will still be required to pay taxes on the money you withdraw.
Possibility of Better Investment Options and Returns
As the article points out, a recent study conducted by Fidelity Investments shows that “men usually take a more aggressive approach to investments and take more risks,” which can mean, alternately, that women tend to take a less aggressive approach to investments and to take fewer risks. In the long run, given that women who are newly divorced will be making decisions individually about investments, they could make less risky decisions and could end up seeing bigger returns.
College Funding for Children
If you have minor children from the marriage who will soon be applying for college, having divorced parents actually could help your kids to receive a better financial aid package. Typically, financial information gets collected from the custodial parent. While child support and spousal maintenance received by that parent need to be included in student financial aid applications, the student ultimately could be eligible for more funding.
Contact a Michigan Divorce Attorney
Do you need assistance filing for divorce in Michigan? Do you have questions about how divorce will affect your finances? A dedicated Michigan divorce attorney can speak with you today. Contact the Law Offices of Michael A. Robbins for more information about the services we provide to clients in Michigan.