You've probably heard the oft-quoted "half of all marriages end in divorce" statistic.
But in reality, on the whole, divorce is on the decline in the United States and has been since the 1980s. (The accurate 50% divorce statistic actually comes from that era.) Experts now say that the actual divorce rate falls at about 39% in the U.S.
But during the pandemic, with couples stuck in the house, homeschooling children and facing financial and health concerns, interest in divorces skyrocketed 34% in the U.S. Newly married couples were the most likely to file for divorce.
It's a sobering topic, but as you might imagine, divorce can peel apart finances in ways you might not imagine. Let's take a look at the ways divorce can affect your finances.
What Divorce Can Do to Your Finances
The reality is that divorce affects men and women financially in different ways. Women usually suffer more than men when divorce occurs, particularly if they spent time taking care of children or elderly parents instead of going to the office during those prime working years.
Let's take a look at what could happen to your financial situation in the case of divorce.
Drop in Household Income
Obviously, the amount of money you bring into your household will drop after divorce.
In 69% of heterosexual marriages, husbands make more money than their wives, according to Pew Research Center. Women’s total household income will drop more than their ex's.
Women's household income generally falls by 41% following divorce or separation after age 50, according to one report from the U.S. Government Accountability Office. In contrast, men’s household income drops by only 23%. Because women live five years longer than men, that dip in income can result in serious financial consequences, including the inability to retire at a desired age.
Loss of Retirement Savings
The divorce rate among U.S. adults 50 and over has doubled since the 1990s, according to Pew Research, and the divorce rate for those over 65 has almost tripled.
Individuals who would normally live off of retirement savings together must divide assets and pay off debts prior to divorce, which leaves assets that normally would have been accumulated together, divided.
Any funds contributed to a 401(k) account during marriage are marital property and subject to division unless a valid prenuptial agreement was put in place. However, it’s not always a 50/50 division. Judges can determine the actual terms of the split, and in a community property state, it's important to know that an ex might actually "get" less than anticipated.
No matter what happens, that still leaves less in the retirement pot for two separate households.
In the meantime, it's to your advantage to learn everything you can about retirement savings. Get on Google Finance and MarketBeat and start exploring!
Financial Surprises Can Crop Up
Sometimes health insurance costs, poor retirement planning and credit card debt can show up as a complete surprise. When one partner "takes care" of all the finances, the other could have been left completely in the dark about the actual state of the couple's finances.
Do you know the actual size of your marital debt, including the mortgage, home equity loan, auto debt, credit card debt, 401(k) loans and student loans? It could end up being a staggering amount — more than you'd anticipated.
Cost of Getting a Divorce Can Shock You
The cost of getting a divorce in the first place can put a major dent in your financial situation.
A divorce in the United States costs around $15,000 per person on average. (The most common hourly rate for a divorce attorney amounts to $250.) The $15,000 figure also considers court filing costs, mediation fees, costs for evaluations such as counseling, "guardian ad litem" fees and other expenses, which may depend on your specific situation.
Credit Scores Can Drop
Unpaid credit or outstanding mortgage payments can affect your credit score if your ex doesn't hold up to his or her share of the bargain. Legally, you’ll still be responsible for each other’s portion of the debt if the other person doesn't pay it.
Not fixing your credit can result in your inability to qualify for loans in the future. For example, if you want to qualify for a mortgage on your own, your ex's inability to make on-time payments can hurt your credit score and prohibit you from qualifying for credit.
Incur Divorce Settlement Taxes
You'll have to solve several tax-related issues. You may get taxed on the marital assets you received through your settlement. Make sure you evaluate the value of all the assets you receive on an after-tax basis and talk with a tax professional about what it will mean for you. Thoroughly understand what property division will also mean for your taxes as well.
What other tax issues may come up? Find out in advance, because you don't want to be surprised at tax time.
Kids Might Not Attend College, Affecting Their Own Future Earnings Someday
This might not seem like an obvious add-in to the list, but your kids can also become affected besides just the normal ways in which kids "are affected by divorce."
Many children may decline to attend college based on the negative financial issues that come from divorce, a study found. This seems to affect economically advantaged white kids in particular, according to the study. In fact, social, behavioral and thinking skills have minimal impact on a child’s future education prospects in comparison to the income change after a divorce.
Know Your Options and Consult the Right Experts
If you think you might want to get a pandemic-induced divorce (or even if you knew before the pandemic that you were headed toward Splitsville), it's important to consult an accountant or tax attorney. You should know everything you can about splitting IRAs, the cost of divorce and how your spouse's 401(k) might get divided up.
In addition, post-divorce, you might believe that you'll get more money for child support and/or alimony or that it will last longer than it actually will. Become as informed as possible so you understand all the financial implications before, during and after divorce.7 Tech Stocks That Are Heating Up as Anti-Trust Talk Cools Down
For the better part of the last year, Congress has had “big tech” in its crosshairs. But the reasons why largely depend on what side of the aisle a particular individual was on.
On the one hand, there are politicians who are concerned about the role that technology companies play in restricting the free flow of information. On the other hand, there are politicians that are concerned about these companies' stranglehold on competitors and innovation.
But big tech scored an important, albeit not final, victory in late June. At that time, a U.S. judge dismissed two separate complaints against Facebook (NASDAQ:FB). The question in front of the judge was whether Facebook held a monopoly on social media. Due to a surge in the company’s stock price after the ruling, Facebook became a member of the exclusive $1 trillion market cap club.
While big tech companies will remain under the Congressional microscope, there’s no denying that investors are looking at the ruling as a signal to rotate back into tech stocks. And that’s the focus of this presentation. What tech stocks should you be buying as anti-trust pressure eases?
It would be easy to start and end the list with the FAANG stocks. After all, the motto “Keep it Simple Stupid” comes to mind. There are simply those companies that offer products that are changing our lives now and will continue to do so in the future. And furthermore, customers will continue to pay for their products.
And I do have a couple of these stocks on my list. But the bulk of the stocks on this list are less expensive alternatives to at least one of the FAANG stocks. It doesn’t mean they’re superior companies, but a rising tide tends to lift all boats. And that means these companies have a large upside and you can purchase the stocks for a lot less. View the "7 Tech Stocks That Are Heating Up as Anti-Trust Talk Cools Down"