Divorce Can be Difficult, But There are a Few Financial Silver Linings to It
Divorce is emotionally draining and nervous, and it also cuts in your pocket a deep hole. Divorce is very costly, from paying the lawyer to losing your spouse’s earnings. You are depriving yourself of the retirement savings and assets that you carefully built up with hard work over the years. The divorce proceedings are also causing you emotional turmoil. It’s really difficult to recover from such issues but there are also positive sides. While that is no reason to commence divorce proceedings, some financial rewards can accrue. This article has been written and compiled to give you a better insight and perspective to the scenario.
Easier budgeting with better monetary control
A divorce ensures zero fights over money. Conflicts over funds allotment, budget issues, and expenditure controls will vanish overnight. Also, divorce does bring freedom the way you always desired. If positives accrue for you, it doesn’t imply that the same benefits go to your spouse.
You access retirement funds earlier
A divorce is among those times when you can access your retirement money and ward off early withdrawal penalty. When a QDRO (qualified domestic relations order) is signed during the divorce, you can withdraw money from your retirement account earlier than usual. This withdrawal exempts the 10% fine applicable to those persons below the age of 59 but still pay income tax if IRA does not hold up your money.
Cashing out from your retirement account is risky but there are options available for those affected by divorce proceedings. You have a much better cash flow position. When divorce proceedings are amicable, people divide the retirement fund balance in the absence of a QDRO. But that may be a costly mistake for you. Before making up your mind, consult both your attorney and financial planning advisor.
Kids, too, benefit financially