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The U.S. Census Bureau reports that over two million marriages take place each year nationwide. In Michigan and other states, an average of roughly half of those couples will later face a divorce. Although a difficult emotional experience for most people, they can and do survive the ordeal. It helps to be prepared in advance to confront various financial issues that often arise.
According to one certified financial planner that specializes in wealth management strategies, there are several financial developments that people don’t necessarily anticipate as they enter the path to divorce. Child support always looms as a potential problem that poses increased expenses during and after a divorce. Most people will want to incur unplanned expenses for their children that may go beyond their anticipated budgets.
In that respect, planning in advance for a cushion for children may be helpful. Not everything can be precisely split down the middle in all cases. Furthermore, tax brackets can change after divorce. When one goes from married filing jointly to head of household this may increase a person’s tax obligation. There are also certain insurance needs may need to be re-examined as a part of the dissolution of marriage process.
Retirement poses a particularly daunting subject in divorce. It may be helpful to have your retirement plan and settlement terms evaluated professionally prior to agreeing on the property division settlement. It could be decidedly beneficial to know in advance how your retirement goals will specifically be met in future years.
In Michigan and elsewhere, there’s probably no way to avoid some of the financial impositions that are associated with divorce. With sufficient advance planning, however, problems can be anticipated and controlled. The divorce can provide an opportunity to set up a new financial plan to provide adequate growth and stability to meet one’s future needs.
Source: The Paramus Post, “5 Ways Divorce Will Impact Your Pocketbook,” Mel Fabrikant, March 14, 2013