Divorce will affect every aspect of our lives. This fact only becomes more extreme the longer a couple was together prior to the divorce. This is because, in a marriage, two lives become one, and in a divorce, one life becomes two. Where we once could split all expenses, while combining all income, post-divorce, we are entirely responsible for ourselves. This, understandably, means our lifestyles will likely be different post-divorce.
High-net worth divorces
Unless a couple is incredibly wealthy, like over tens of millions of dollars, there will be a significant change in lifestyle after divorce. If a couple can separate and still be millionaires, their divorce will still likely mean a lifestyle change, just less dramatic than a less wealthy couple. Perhaps, divorce will only mean flying business class and staying at 4.5-star hotels, but it is still a lifestyle change. The more significant impact will be on those families that were wealthy together, but not so much separate, or for single-income families. For these families, who where once in the upper crust, when those two lives separate, a dramatic lifestyle change may result.
The cost of divorce
For the borderline wealthy or the asset wealthy, but cash poor, a divorce can wreak havoc on the finances, if both spouses are not on the same page. If they insist on a protracted legal battle, those assets will dwindle, quickly. Litigation is expensive. If, on the other hand, they can work together for a shared (but, separate) best future, they can save the marital estate for themselves and not the lawyers and court system.
Another key consideration should be one’s retirement savings. If the couple is later in life, this will be a key sticking point because a shared retirement is now two separate retirements. Together, those accounts may be plenty, but separately, a post-divorce lifestyle may be dramatically different.
Plan, budget and be realistic and honest
For our Los Angeles, California, readers, this post is not meant to be scary. It is only to drive a point home that couples must begin planning and budgeting before a divorce is finalized to ensure a happier post-divorce life. In addition, they must be realistic and honest with themselves about their post-divorce finances.