Financial Rewards Of Divorce That Not Everyone Knows About
Divorce is indeed nerve-wracking and emotionally draining, notwithstanding the fact that it cuts a deeper hole in your pocket. From shelling out money for the lawyer to losing out on your spouse’s earnings, divorce is costly, without a doubt. You walk out getting deprived of your retirement savings and your assets that you have garnered all these years with your hard work. Aside from that, you go through an emotional turmoil that a divorce inflicts on you. It’s really hard for an individual to recover from such issues. However, there are some positive sides. While that can’t be a reason for you to gear up for a divorce immediately, take a look at the financial rewards that could turn things for the better.
Budgeting Becomes Easier, Giving You A Greater Control Over Your Money
A divorce means no more fights over money. Conflicts over money allotment, budget issues, and expenditure restraints will be out the window and out of your life. Every coin has two sides and divorce does bring with it freedom, the way you always wanted. But if things start getting positive for you, it doesn’t necessarily imply that it would be the same for your spouse and vice versa.
You Get Access To A Retirement Fund Earlier Than You Expected
A divorce is among those times when you can get access to your retirement money and ward off an early withdrawal penalty. When a QDRO or qualified domestic relations order is signed during a divorce, you are permitted to withdraw money from your retirement account earlier than usual. This withdrawal exempts your money from the 10% fine applicable to those individuals who are below the age of 59 years old. Having said that, you still need to pay your income tax if your money is not pushed into IRA. Cashing out a portion of your retirement account can turn out to be risky. However, it rolls out some options to an individual who has recently gone through the divorce proceedings. You can find yourself in a much improved cash flow position, to be precise. In situations when the divorce proceedings are quite amicable, people divide the retirement fund balance in the absence of a qualified domestic relations order. But, that can prove to be a mistake you may have to pay a hefty price for. Before coming to any kind of conclusion and making up tour mind, consult your financial planning advisor and your attorney.
Kids Will Benefit Financially, Too
Divorce can take a toll on a kid’s mind — it really makes life difficult for them. But, the only positive role that a divorce can play in a kid’s life is providing them with a college financial aid. Applications require basic financial details from the parent who is in custody of the child. However, the alimony and child support delivered by the non-custodial parent must be mentioned on the FAFSA.
Social Security Benefits For The Aged Divorcees
If you are a divorced individual, you can file for Social Security spousal benefits at the time of retirement. But, you can only lay your hands on the benefits if you have been in a marital alliance for a minimum period of 10 years. Young people are no more entitled to it, and older divorcees will be getting hold of half of their spouse’s benefits while postponing their own and allowing it to grow till they reach the age of 70. For people who are married, this gets implemented only if an individual’s spouse has initiated his or her own benefits. But, the rules are not the same for divorcees. After getting a divorce, you don’t need to wait until your former spouse turns on social security.
The Sunny Side
A divorce doesn’t imply that you will lose all your money. A divorced individual can structure up their assets and wealth even on a lower income. They only needs to make smart use of the available resources. Though a divorce doesn’t improve everyone’s financial condition, many people do derive benefits out of it. It may be quite surprising for some, but the reality remains the same. There are certainly some positive aspects of a divorce, especially if you look at the financial side. But it’s something you should never rush into. Never decide on anything in haste. Look before you leap.
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