Divorce often comes at a high price. No one comes out of it without losing something: income, family home, time with the kids. But it’s not without its upsides, once you’re out of a relationship that just didn’t work. When you keep your focus on rebuilding, you’ll see the silver lining of a difficult process, particularly with these five surprising financial benefits of divorce.
#1 Easier Budgeting
Money is one of the biggest causes of divorce, so once you have split, the arguing is over. If one spouse was a wild spender or never let the credit card grow cold, the other can frequently make up for losses by taking charge of the budget with no one else to mess it up.
#2 College Aid For The Kids
Divorce is always difficult for kids, but there’s an upside when it comes to college. The Free Application for Federal Student Aid (FAFSA)asks only for the finance info from the custodial parent, effectively increasing potential funding. Remember, child support and alimony received from the non-custodial parent must be included on the FAFSA.
#3 Early Access to the IRA Without Penalty
Splitting up an IRA in the divorce? It’s common for retirement savings to get split, depending on your situation. You can pull money out of the IRA early without the 10% spanking in some cases. Have your divorce attorney draw up an agreement called the “qualified domestic relations order.” Remember, income tax still needs to be paid if the money is not rolled into an IRA, so make sure you set aside something for Uncle Sam at tax time.
#4 Social Security Benefits for Divorcees
If you were married more than 10 years and you reach 62 still unmarried, you may be able to file for Social Security benefits based on the historic income of your ex. This lets you wait to take your own benefits until you reach full retirement age, when you may be eligible to collect an even higher benefit. Your ex will never know!
#5 Reset Your Financial Direction
You may be dealing with less income, but that doesn’t mean you can’t save and prosper. It will feel good to take control of your finances because you’ll be more secure being in charge, whether you’re a man or a woman. Women usually make different decisions than men, so divorce may allow each spouse to decide to be as aggressive or as conservative as each likes.
Be sure to ask your attorney or financial advisor how to make these tips work for you!