Retirement suffers
Even if you're 20 years away from retirement, divorce will hurt your golden years. That nest egg and pension will now have to support two households. A divorced spouse can claim a share of the other spouse's pension based on a formula that factors in the number of years married and the number of years at that employer."I've done financial plans for people when they were together," Carbonaro says. "I got them in their 30s and the plan was to retire at 50. They were perfectly on target. Now that they're divorcing, they'll be lucky to retire at 65. Whatever your plans were for retirement -- it's all blown up."
Sometimes women in divorce make a bad trade -- opting to keep the family home in exchange for any claim to the retirement account. "The problem with that is the house is a very expensive asset," Carbonaro says. "It's not tax-deferred. I've had people who couldn't even afford the taxes on the house and they just gave up their claim to the retirement money."
Divorcing women with no experience either in a career or in handling finances get hit hard with divorce.
"Women have this fantasy idea that they can get rid of the man and keep the lifestyle," says Marilyn Barnicke Belleghem, a registered marriage and family therapist in Ontario. "It doesn't work that way. Oftentimes, they can't get so much as a gas credit card or hook up their telephone because they haven't established credit in their own names. Some of them even call their husbands 'Daddy.' They don't realize they have to grow up and become adults."
Invest in the marriage
For some couples, therapy to save the marriage can save money. "At once a week for $80 to $150 an hour; that's only a fraction of what an attorney charges," Brooke says. "Even if it takes two to five years of weekly therapy, that's only $5,000 a year for therapy. In financial costs alone, it's way worth it."Still divorcing? How to save
If you must divorce, set your anger and hurt aside, pursue an amicable divorce and save big. In an amicable divorce, both parties usually agree to voluntarily provide financial information, which saves court costs. Negotiations are completed out of court before the complaint for divorce is even filed, again saving money and allowing couples to be more creative in dealing with the current economy, says Randy Pitler, of Pitler Family Law and Mediation in Royal Oak, Mich.Parents -- not kids -- shuttle
Another way to save money is not to set up two complete households. Some divorcing couples keep the family home and also get a small apartment. The children stay in the family home instead of switching back and forth, while the divorcing parents take turns in the small apartment, Belleghem says."Each spouse lives in the apartment when they're not in the house," Belleghem says. "Nobody's trying to run an entire life from the little apartment." Some divorcing couples save even more by creating that apartment in the basement of the family home, she says.
Sometimes divorce makes sense
Finally, sometimes divorce makes sense in a bad economy.
"Housing values have dropped. Retirement values have dropped. Thus, there is less 'asset' to divide," says Fresno, Calif., attorney Jerry Childs. Divorce can be win-win financially. A spouse buying out the other spouse's share of homeownership or interest in a retirement account pays less. The spouse who is being bought out often can count on that same home or retirement account increasing in value again over time, Childs says.
And if your spouse is running up spending and won't stop, now is the time to pull the plug, Childs says. "Credit can be wiped out by an irresponsible spouse," he says. "In the past, it was OK -- spending didn't matter because wealth grew to match it. This is no longer the case. Now may be the time to get out."