Money is a significant source of stress for many people in Massachusetts. That stress may even feel amplified during periods of uncertainty or significant life transitions, such as divorce. Protecting post-divorce finances is a priority for most people, but how to go about doing so may be less clear. Here are a few things to keep in mind.
After dealing with everything that comes with divorce — including property division, child custody and more — it is easy to forget about the small details later on. It is not uncommon for people to forget all about updating their insurance policies and benefits. Whether needing to decrease or increase certain coverage, forgetting to make important changes can cost more in the long run.
Taxes are another important consideration. While filing separately rather than jointly as a married couple will already change things up, those individuals who are paying alimony may not realize that the laws have changed regarding deductibility. In past years those who paid alimony could deduct the amount from their taxes, though that is no longer the case.
Finally, divorcees may want to adjust how much they put away for retirement. Most retirement assets are split up during divorce, which means years or even decades of savings could be suddenly halved. The Center for Retirement Research conducted a study in 2018 that showed households with past divorces struggle more than others when trying to maintain similar standards of living during retirement. Making adjustments soon after divorce could help mitigate this effect.
Getting a divorce can be both an emotionally and financially stressful experience. For these reasons, some individuals may even consider delaying filing, even if they are unhappy in their marriages. However, with careful planning and a consistent eye for detail, most Massachusetts couples can successfully divorce without incurring significant or severe financial consequences.