The Silent Financial Crisis Of Divorce
Nobody gets married with the intention of getting divorced, but statistically it happens almost more often than not. It’s not just an easy out of a bad situation — divorce brings with it a variety of complications, many of which create lasting financial difficulties.
A divorce is always a tragic end to a marriage, no matter how good or bad the relationship ever was. The heartbreak is pretty universally recognized, but many aren’t aware of just how many financial ramifications the situation causes.
The Average Cost of Divorce
Google the cost of divorce and you’ll initially pull up results that detail the filing fee for the state, but the reality is that after everything is said and done, the average cost of divorce in the United States is about $13,000. Well beyond simply filing to change your legal status, fees cover lawyers, mitigations, and proceedings both in and out of court. Fees can climb even higher depending on the extent of custodial and financial needs, dragging out the time and costs well beyond the average.
The average cost of divorce in the United States is about $13,000.
Divorce Doubles the Living Expenses
Separate homes naturally follow a divorce, as do the costs of those two residences. Moving in and of itself is costly and exhausting, even if one person is just moving down the street. Sometimes one spouse will even have to move out of state, causing not only a major increase in fees but also a severing of relationships between one parent and any children involved.
Whether both spouses were working while married or one was a stay-at-home parent, rents or mortgages have essentially doubled. For many, this often means going back to work, working longer hours, or finding a new job altogether to cover a new mortgage or rent. Additionally, as families split up, houses that were once an appropriate size are now too large or unnecessary, bringing additional expenses that are hard to cover in an already tumultuous time.
Divorce Increases Childcare Costs
As many stay-at-home parents go back to work after a divorce, they’re forced to find alternative options for childcare. Costs of childcare range depending on age, but on average, a family is looking at a price tag of about 10-20% of total income. For some families, these costs exceed that of even their rent. Young children who aren’t school-aged need to be in a full-time daycare, and school-aged children can require care both before and after school.
A family is looking at a price tag of about 10-20% of total income.
Many children also lose out on some academic assistance once provided by two parents with more time, and costs for tutoring or other educational intervention may be necessary as well.
Loss of Benefits, Savings, Insurance, Other Shared Accounts and Assets
Most married couples have combined bank accounts, savings, and retirement investments that must also be divided up in the divorce. For married men, the average value of independently-owned, defined-contribution retirement accounts is about $85,000, while for divorced men the value drops to just under $59,000. While the discrepancy is only around $12,000 between married and divorced women, it’s clear that men and women who have been through a divorce suffer long-term financial implications. Older studies have even shown a 77% decrease in overall wealth because of divorce.
Some studies have shown a 77% decrease in overall wealth because of divorce.
Divorce is never how anyone intends for a marriage to end, but it’s important to realize that it’s much more lengthy, complicated, and costly than appears upfront. This isn’t to say that marriages aren’t hard work and that many difficulties don’t arise in relationships, but knowing the many complications of a divorce is crucial for couples looking at the potential of this long-term situation.