Knowing what other couples say they wish they knew before getting divorced can help spouses prepare for financial setbacks and minimize damage to their long-term goals.
The following are some changes divorced couples have experienced and things they say they wish they had known in advance.
Federal Income Tax May Increase
Federal income tax liability often increases significantly after a divorce. In many cases, it may have been years since the divorcee filed individual taxes, resulting in an unpleasant surprise when it comes time to pay federal income tax. Online tax calculators or financial advisors can help divorcing spouses compare married filing jointly to filing as individuals so they can make appropriate changes that minimize the shock of filing as a single taxpayer.
Overall Costs May Increase
Many couples work as a team when it comes to making payments and covering costs, whether for bills or leisurely activities such as dinner parties and vacation expenses. Individuals may find that many of these costs go up after a divorce.
In many cases, divorcing couples may still opt to share a family phone plan, for instance, but if one party switches carriers, this could also increase costs for each party. Other expenses such as car insurance will also likely increase as plans change, discounts expire, and the general cost of living rises.
Spousal Support Considerations
Maintenance payments in Illinois are determined by evaluating each spouse’s income and the length of the marriage. In some cases, spousal support payments can account for 20% or more of a divorcing spouse’s income. Sometimes, however, the courts may determine that spousal maintenance is not appropriate. Since spousal support can significantly impact the financial future of both spouses, divorce lawyers often help their clients evaluate the probability of court-ordered maintenance in advance.
Retirement Plans Could Change Significantly
Individuals may find that, after a divorce, retirement goals may become more difficult, or easier to achieve. If costs increase, it may become harder to invest as much into a 401(k) account, making it necessary in many cases to change plans. On the other hand, divorce can improve financial situations for some people, putting retirement plans within reach.
