Realities of Divorce and finance...ouch! How Did You Get past That?

Updated on June 16, 2015
J.B. asks from Boston, MA
20 answers

So...I met with an attorney today to discuss my situation and will be meeting with 2 more attorneys and a mediator over the next few weeks to see what they say and figure out who I'll work with when I decide to move ahead.

As expected, the financial piece of this is tough to swallow. Aside from our house situation (negative equity) and the fact that I would be unlikely to get child support even if the kids spend more time with me due to income disparity in my favor, retirement came up. I am the only one of the two of us with real retirement savings (he thinks he won't live that long or will inherit something). I was told today that I could easily lose half of my savings, even the part that was a pre-marital asset. I won't get into details, but the amount I would lose is 6 figures and the future value would provide several years of retirement income, so not pocket change.

For those who have sacrificed substantial assets to end a marriage, did you get over it (please say you did LOL!) and did you financially recover? On one hand, I'm 40 and have another 25 years to accumulate savings. On the other hand, my income is good but not amazingly good and that's a lot of money to try to make up for at this age and a really tough pill to swallow. Were you able to just let go and move forward? Do you get to a point where you don't really care what it costs to start over?

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answers from Washington DC on


I'm sorry. This sucks. When I divorced my ex-husband we didn't own a home. He was in the military. We decided for a clean break. It was easier that way.
He took his debt. I took mine. I was a GS - so I made more money than he did as well. He had no savings to speak of either.

For me? I would say "it's only money" and let it go. I would choose my health and sanity over money. You stated you have 25 years to save again...I'd take the 25 years to save and give him the money to save myself. YOU CAN DO THIS....I realize it's a huge chunk of change...I'm sorry. I really am sorry!

6 moms found this helpful

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answers from Danville on


I will not live long enough to recover financially from my divorce...and that is OK! Was definitely worth it!

One thing I did do before I filed is set up 529 accounts (with my mom) for each of the seven kiddos. Once that $$ was in their names, with my mom as the administrator, I filed. The ex had not a clue...maybe still doesn't. My goal was to protect my kiddo's and their educational opportunities. His lawyer was none too sharp, (and ex was probably too drunk) so I am not sure even today if he realizes what I did...But so far, all kiddos have had college covered - with NO additional help from the ex.

I might see an accountant before you tip your hand to your ex about divorcing. If you cannot have the $$...perhaps a college account for kids can be set up that he cannot touch? I have no clue on the laws in your state. I was just lucky in my case I think.

I am thinking of you...and hoping all works out as it should.

Take care of YOU!

18 moms found this helpful


answers from Albany on

Cuz it's only money, JB. You make it, you spend it, you make some more. Either way, you can't take it with you in the end. What your financial statements say does not define who you are.


14 moms found this helpful


answers from San Francisco on

JB, I haven't had that specific problem, but you've been dealing with your husband's issues long enough. I don't think you should let money influence your decision.

Life is a crapshoot. And I don't see how you can stay with hubby, given everything that's happened. You're young, in my books, and 25 years is a lot. Let it go and move forward.

12 moms found this helpful


answers from Phoenix on

I was 40 when I divorced and had a 7 and 4 yo. I lost everything in the divorce, and it was 'substantial'. But I got the kids, my car, and my $3600 credit card. He got his truck and his $3800 credit card. He took his clothes, the tv and computer and some furniture. I really lucked out. But I lost a 450k house, all our retirement and savings. He didn't contest anything and I get child support (when he works).

I didn't care that I didn't have anything because I knew I could not stay with him for one second longer and there was a price to pay for that. And I paid it. But now 8 years later I know it was worth it.

I got married at 30 and thought I had waited for the "right" one. Nope. So I had NO plans to EVER marry again. I was done with men. I had my kids and moved in with my mom and that was going to be my life.

However, shortly after my divorce was final, I met my now husband without looking or dating. He is NOTHING like my ex. He works hard, financially supports us so I don't have to work and we are once again saving for our retirement. We have a great life and I'm very blessed.

So you can't see it now, but things WILL get better once the dust settles. Even if you decide not to date, you will be able to do it on your own. It just takes some time and discipline. We don't buy everything we want because we have our eyes on a bigger picture. We know that we have to rebuild our finances back to where they were. Both of us lost everything in our divorces. So whether you end up by yourself or with someone else, it isn't impossible to rebuild yourself. Lots of us have been through it and have turned out for the better. Good luck.

9 moms found this helpful


answers from Minneapolis on

Yes, you can get past this. You can DEFINITELY GET PAST THIS. I work in the legal field (not a lawyer and I am not giving legal advice) and some of the big mistakes I see regarding divorce are: 1. Not hiring a good lawyer. Big money doesn't always mean better, but don't cheap out on this. 2. If a really good lawyer says "let it go" than by all means do so. Whether or not that means money or giving in on a visitation issue or whatever. 3. Letting anger and bitterness drive your decisions. That's a toughie, but just remember, you are doing this for your future happiness - that is priceless. 4. Do not cut off your nose to spite your face - don't spend $20k to save $15k just because you can.

I don't know what the rules are in your state, but don't just assume that you will lose all or some of the retirement. Sometimes lawyers plan for the worst but hope for the best. Clients would rather have a happy surprise.

As a back pocket option, if you do get in a real financial bind after the divorce is over, you may be able to file bankruptcy (if for no other reason to get out from underneath a home with negative equity). If you don't know a whole lot about bankruptcy, meet with an experienced bankruptcy attorney - do NOT listen to stories from friends and family about what happened to them, their neighbor, or a guy at their church.

Good luck (I really mean that)! I have been in your shoes. This, too, shall pass :)

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answers from Houston on

In the words of my husband, "Is that all it costs to get my sanity and life back? SOLD!!"

In truth when we sat down and calculated how expensive his ex was and how little they really saved, it wasn't a bad shake. She was never going to save enough, she was never not going to spend more than she ought to and she was never going to be fiscally responsible in general. All in all walk away, taking your lumps. We have recovered well but only because we are on the same page financially. Good luck and may you find peace.

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answers from Miami on

Hasn't happened to me. I'm grateful beyond words. But I just gotta say, that I'd SO much rather have the next 25 years out of the clutches of this awful man and give up a finite amount of money than continue the way you have and will, if I were in your shoes. You are still young (I can say that, being in my mid-fifties). You have a right to a much better life. PLEASE, seize the day!!! He'll either burn through a smaller amount of money after you dump him, or burn through ALL your money for years to come...

9 moms found this helpful


answers from St. Louis on

I can't imagine it will be as bad as you think. You should be able to prove how much you had in your retirement before you married. Of course they play the what you lost, what you gained. Not knowing the numbers I am probably useless here. If you keep the house half that mortgage goes to him which means to pay you for it you will get an offset in your 401k. Granted you then have the full debt but if you are underwater you stuck with it anyway.

Pretty much what they do is throw it all in a bucket and divide it in half.

I am trying to sort out where I am financially since I remarried. I supported my household so after I married we have gone kind of nuts with retirement savings so it is kind of hard to split that. Still before I met him I would have had my house paid off by the time I was 65 and will have a pretty good 401k by then so yeah, I think I have recovered.

I just want to add, in case you go back and read these. I gave up a lot that I could have got to get this done. I could have taken the cash value of half his stock in his family's business. Did not seem right to me plus it would have added years to the fight. Nope, I took the high road and there is something liberating about getting to be completely self made after a divorce!

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answers from Anchorage on

Splitting retirement is normal in a divorce, even if both people have one. My sisters husband put off their divorce for years because he didn't want to loose money and thought they could work it out eventually and be happy. My sister recently got divorced and her husband tried to talk her into just keeping her retirement and him keeping his, but his was way more then hers and so they split both per her lawyers advice. He too lost 6 figures in the deal. My husband and I talked about it after since I also have no retirement and realized that it would be okay if we had to split his because right now he is building it up for us both, so the way he sees it half of it is mine anyways, because we have built this life together and made choices together that lead to me not having the same kinds of future funds. Just focus on the fact that you are still young and have time to built it back up, and on the fact that you will be happier free from your marriage.

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answers from Washington DC on

A good friend of mine went through this and lost half of her retirement. Her ex had nothing in retirement either, and the kicker is she watched him blow the 6 figures she lost. She was in her early 30's then. She also had accumulated a huge savings account, and he got half of that too. Within 1 year, his money was gone. She still has a boat load. And yes, she recovered just fine. She actually built a house right after the divorce and now rents that because her and her new man live together, 6 years later.

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answers from Miami on

JT - you need to see the plan administrator of your 401K and you need to see a CPA. Lawyers will tell you that they know all the answers but usually they don't.

Know Your Plan, Know Your Options

When deciding how to divvy up your 401k account with your soon-to-be ex, start by discussing options with your plan administrator. "A lot of what you can do with your 401k is directed by the plan," says Laura Johnson, a family law paralegal and author of Divorce Strategy: Tactics for a Civil Financial Divorce.

Each plan has its own set of benefit provisions and administrative rules. While some plans divide earnings by percentage, others divide by shares. And while some permit a distribution of the ex-spouse's portion at the time of the divorce, others require recipients to wait until retirement. "Before you talk to your lawyers and financial planners and accountants - and well before your divorce decree is drafted - you need to do your own research into your plan's guidelines," says Johnson. "And don't expect anyone else to do it for you," she warns. "Because in many cases, they won't."

The Equitable Split: Four Common Options

Once you've researched your plan administrator's rules and stipulations, you'll likely have one or more of the following options for dealing with your 401k in the divorce decree.

Option 1: You keep all of your 401k, and your spouse takes other marital assets of comparable value.

This option is sometimes cited as the least complicated from the attorney's point of view, but it requires careful research and financial calculations. If you choose this route, you'll need to consider at least two economic factors to ensure that you and your spouse remain on equal financial footing: 1) your long-term tax consequences and 2) the current and long-term values of the assets being divided.

You'll need to subtract the imputed tax - the tax you'll eventually have to pay on the amount in your account - from the value your 401k will hold at the time of your retirement.

On the other side, your soon-to-be ex will want to weigh the long-term value of the 401k against the long-term value of the assets he or she is receiving. For instance, if your 401k is worth $100,000 at the time of the divorce, and you have a fairly long time horizon until retirement [during which your account will earn compound (tax-deferred) interest], your 401k may be worth much more than $100,000 at the time of your retirement. Your ex will want to ensure that his or her share of the marital assets will be equally valuable over the long haul.

Option 2: You and your ex-spouse split the 401k assets.

If you want to split your 401k account with your ex rather than hashing out a division of marital assets equal in value to the 401k, then you will need a Qualified Domestic Relations Order. A QDRO (pronounced "quadro") is a court order that creates the right for an alternate payee (in this case, your ex-spouse) to receive all or part of your plan account. The QDRO must be a judgment, decree or order that is made pursuant to a state domestic relations law and relates to the provision of child support, alimony payments or marital property rights.

According to Benna, the least complicated procedure is often for the QDRO to stipulate that your 401k plan will be split into two accounts. This would enable you to continue to manage and contribute to your account as before, while your ex-spouse could make investment choices for his or her account, but not contribute to it. When you retire and become eligible to receive distribution of your funds, most 401k plans are set up so that your ex-spouse will also be eligible for distributions.

If you choose to divide your 401k, you may have to iron out issues such as repaying an outstanding loan, and how to allocate any earnings or losses that occur between the date of the divorce and the date the QDRO is made effective by the plan administrator.

"The drafting of a QDRO is a sensitive spot," says Johnson. "Because many divorce lawyers don't investigate a particular pension plan's guidelines before giving advice to clients on separation agreements, they often submit inadequate QDROs to plan administrators." And if the QDRO contains vague language or doesn't conform to plan guidelines, your plan administrators will reject it. It will then have to be re-drafted by your lawyer or your ex-spouse's lawyer. This, of course, results in additional fees. And more emotional hardship.

"Because of problems with QDROs, I've seen lag times of several months - or even years - before QDROs were accepted by plan administrators and the 401k plans were actually divided," says Johnson. "It takes an emotional toll. People feel like their divorce will never go away."

The moral? Understand your plan administrator's guidelines for splitting the 401k before your attorneys begin drafting the QDRO. Share this information with your attorneys. And begin the drafting process early in your discussions, so you'll have time to get it accepted by the plan administrator as part of the divorce settlement.

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answers from Dallas on

I'm not in your shoes but I do know here in TX that everything is split down the middle. There is no alimony here either.

We were chatting with our financial advisor about strategies not too long ago and the best way to benefit the most. We discussed even on the what if we split, I still can collect on my hubby ( or would be ex) social security benefits as long as I didn't remarry. As for our investments, 401K's, IRA's, properties, our company and all other assets.... It would be split.

We're not looking to split up but it was something our Advisor wanted us aware of because if one person gets fed up and leaves.... It's going to be costly for all, heavily financially and if course the emotional part as well.

I guess you would have to determine how badly you want out and what sacrifice you are willing to make.

I'm sorry you are dealing with this right now. Best wishes fur getting all of your Ducks in a row before proceeding.

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answers from Boca Raton on

Eeeek . . . what a bummer. I haven't been in your shoes; even though I'm divorced, mine happened when I was very young and we had no financial assets - only debt.

If the marriage is irretrievably broken, I would look at it as if I were standing in a hole, digging the hole deeper by staying married. Chances are you will continue to earn the bulk of your retirement funds. Do you want to split MORE of it with him later (even if you stay married you'll at least be sharing with him)? If you end your marriage now, at least you don't go further in the hole and you can actually start climbing your way out.

That being said, it is EXPENSIVE to divorce, both in the short and long term. "Millionaire Next Door" talks about how the majority of first generation millionaires are married to their first spouse (granted this book came out in the 90's).

I'm sorry that you're going through this. I think you will have to really search your heart, and perhaps consider some counseling, to decide how you want to proceed. I don't think there is a right or wrong answer. Wishing you PEACE and happiness no matter what.

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answers from Washington DC on

oh, damn. so sorry, sweetie. i was afraid this might be the case.
dammit dammit dammit.
that's a huge chunk to lose, and it sucks. i kick your husband in his stupid kneecap.
i haven't walked in your particular shoes, so i'm drawing off Generic Crone Wisdom here, but i'm very, very confident that YES you will get over it, and YES you will financially recover. not quickly, maybe, nor easily.
but you will. because you're about to lose a huge draggy heavy useless anchor from around your neck, and once you're used to how free and light and unencumbered you'll be, bumping up that retirement account will be a piece of cake. as you say, you're a young woman and have a lot of earning years ahead.
retirement security is a Big Thing. we just met with an advisor and have had the wake-up call. all of our comfy discretionary income just went away and is getting dumped into our scarily skimpy retirement. and we're in our mid-50s, with way less time than you. and financially i'm just basically a dead weight<G>.
i'm not going to gloss over this big loss and tell you it's nothing. but bitter pill though it is, it's still so very, very worth it. please don't second guess your decision. you WILL let it go and move forward. and even if it never gets to where you really don't care at all, there are so many pluses in the 'move on' column that you'll find they way outweigh this negative, considerable though it is.
don't stop, babe. you are absolutely doing the right thing.

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answers from Fayetteville on

My mom's husband divorced his wife of 20+ years. He just wanted out! He has always said the one who wants out more--pays more. He lost a lot--but he just wanted out. It was a price he was willing to pay for freedom.

You might have to downsize or drive your old car a little longer, but I think it will all be worth it in the end:)

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answers from Chicago on

Sorry J.B. but this is the reality of divorce. At the end of my brother's divorce, a company he was a board member on was sold. My ex SIL got a nice check (a few hundred k!) If the sale had gone through a few weeks later, she wouldn't have gotten anything.

My brother even overpaid her for the house. To him it was worth it because he wanted out, and it was her money too, they were married after all, and the nature of marriage makes it everyone's money, not just yours. They were together 20 years.

Just do it. You have more than enough time to recover.

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answers from New York on

This may not be helpful but I also have earned or contributed about 80+% of our wealth. I'm not too worried about a divorce but when we've had a big fight, it'll occur to me he can take half. What I've thought is I will tell everyone we know that he has to take my money. I wouldn't expect to keep 80+% but if he wasn't reasonable, I'd get nasty the only way I could. Try to hurt his ego amongst his friends. Not sure if that approach would make a difference for you or I but maybe something to consider if it gets bad. Hopefully it won't and hopefully you can use other strategies. If not, still sounds like it's worth walking away. 40 is young and think of all the earning years you will not have to give half to him. If he's a frivolous spender, you may come out ahead.

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answers from Jamestown on

Its been almost two years for me... and it still pisses me off to think of the money I lost, but the anger doesn't last long. As time goes by, it gets easier, especially as life gets brighter and brighter by not being with him. I was the bread winner and 401K holder, he was a free-loader. He tried to take half of my retirement savings. We had a lot of debt so instead of handing over my savings, I cashed it in and paid off all of our debt. I had a little left over to help me transition after he kicked me and my daughter out of our rental house. It was the best thing I ever did.... just getting away from him. I don't care about the money anymore because I have my daughter, and a new life. (and debt free.) I also have another great job and have restarted my retirement savings. Good luck and best wishes.


answers from Kansas City on

well...I walked away with nothing except my car and my son. Literally.

Now, I had a good support system and thanks to them, I landed on my feet. But your last sentence hit it on the head. I got to the point I didn't care. I was willing to be starving and destitute (ok not really, I went home to my mom, but it was still a huge, bitter pill to swallow, especially leaving all my earthly goods behind) to get out of a horrible marriage that was quite literally making me lose my mind.

You WILL be ok. I promise. You can do anything if you're motivated! I mean that with all of my heart!

(PS - I also didn't need a high-priced lawyer because there was no property or complications really. I had to scrimp and save and scrape enough together, and it all worked out. He never would have paid and we would never have divorced if I hadn't. If I can do it, you can!)

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