According to the U.S. Census Bureau, over 2 million marriages take place in America each year. It stands to reason that these people don’t go to the altar believing their marriage will end in divorce. Yet that will be the reality for an estimated 40 to 50 percent or more, depending on whether it is their first or a subsequent marriage, according to the American Psychological Association. Further complicating the issue, financial issues arise when a divorce takes place, issues which most people don’t tend to think about until it actually happens to them.
“Most people don’t realize the depths of what divorce can do, when it comes to their finances,” explains Samantha Fraelich, CERTIFIED FINANCIAL PLANNER TM Professional, and Vice-President of Bernard R. Wolfe & Associates, Inc., a company that specializes in offering wealth management strategies. “It is usually a matter of much more than a loss of salary or income. In addition to that, there are other issues that can arise and impact your finances.”
Here are 5 ways that divorce can have an impact on your pocketbook:
1. Legal Assistance. Attorney/Certified Divorce Planner costs—be prepared to spend thousands, even if you think it will be an amicable divorce. These services are not inexpensive.
2. Childcare Expenditures. If children are involved, child support will need to be paid by the parent who doesn’t have sole custody of the kids. But for the one who does end up having sole custody of the children, keep in mind that it’s typically more expensive for you, since many costs pop up at the last minute and it’s tough to split everything like that with a former spouse.
3. Uncle Sam. Tax brackets will change, once you go from married filing jointly to head of household. Going from a joint filing status to a single filing status could increase your taxes. Be prepared for this so there are no surprises at tax time..
4. Future Planning. Your plan for retirement has probably drastically changed now that you won’t have two people sharing the costs. It is usually helpful to get a retirement plan run by a professional, ensuring it includes the proposed settlement agreement, before you actually sign divorce paperwork. That way, you’ll know whether the numbers will work in the future for you, as well as today.
5. Insurance Needs. Many couples don’t have long-term care insurance since they think their spouse will help take care of them. Once single again, long-term care insurance may need to be considered for those who are unable to self-insure that expense. Also, if you both agree you’d like long-term care, some companies offer “couples discounts” so it may be beneficial to apply and purchase the insurance before you decide to file any legal proceedings.
“Divorce is likely to have an impact on most people’s financial situation,” added Fraelich. “But that doesn’t have to mean disaster. It should be the perfect opportunity to meet with a financial advisor, set some revised goals, and start working toward a new future for yourself.”
Bernard R. Wolfe & Associates, Inc., has provided financial management strategies and investment services since 1981. They assist a wide range of private and corporate clients with everything from estate planning and investment to divorce planning. The company also offers professional women’s financial planning services, led by Samantha Fraelich, a CERTIFIED FINANCIAL PLANNER TM Professional.
To learn more about Bernard R. Wolfe & Associates, Inc., visit the website at www.bernardwolfe.com.
Securities and Investment Advisory Services offered through NFP Securities, Inc. Member FINRA/SIPC.
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