One of the biggest concerns for people getting a divorce is how to maintain financial stability as a newly single person. There are a few easy steps you can take to ensure that your divorce causes minimal financial upheaval.
In many Redwood City marriages, one person often takes control of the finances, while the other is left in the dark. When it comes time for a divorce, this lack of knowledge and awareness can cause a number of complications. To avoid these issues, make sure you have a full picture of your current financial status before filing for divorce. You can collect information regarding your income, assets and investments, and consult with legal and financial advisors to determine what to do next.
Another common issue is that people do not realize how much things will change financially without their spouse’s salary. As a result, many people insist on keeping the family home, only to realize they cannot afford the mortgage payments as a single person. Some divorced couples even decide to continue to share ownership of the family home until their kids are done with school, but continuing to be financially tied to your ex-spouse can be problematic unless both parties deal with every aspect of owning a house, including improvements to the property and taxes.
Additionally, many people depend on their spouse for health insurance. If this is you, you may be able to continue receiving benefits through COBRA for up to three years, but your premiums may go up.
You and your spouse may also have been thinking about retirement. Divorce can throw a wrench into those plans. Homemakers who have worked outside the home for less than 10 years may not be able to get Social Security benefits. However, if you were married for 10 years or more, you may be able to get half of your spouse’s benefits. A qualified domestic relations order, or “QDRO,” may allow you to recover some of your spouse’s 401(k) or other retirement funds. If you’re the one receiving benefits, you may be allowed to withdraw your retirement money without a penalty upon divorce. Before you do this, consider the importance of having those funds available to you later in life.
Source: CBS News, “Divorce tips for financial security,” Jillian Harding, Nov. 13, 2017