Navigating Financial Anxiety In Challenging Economic Times – Divorce

Recessions can take anyone by surprise. Many different
economists have been predicting a recession for months now, though
whether it is for a long or a short downturn, and when exactly it
may fall upon us, is entirely up for debate. This is the cyclical
nature of the economy. Although 2023 may be a challenging in
various ways, your main challenge could be controlling your
fear.

In my book, Divorce: It’s All About Control. How to Win the
Emotional, Psychological and Legal Wars, I underscore just
that: control. A spouse who can control their anxiety, even in
financially stressful times, can control the outcome of their
divorce. This mindset is key to avoiding long-term emotional damage
and will help you (ideally sooner rather than later) move on in a
positive light.

The Many Effects of an Economic Downturn on Divorce

If any spouse is considering a divorce in a potentially harsh
economy, they must look at their specific situation to determine if
they should proceed with a divorce or wait until better economic
times return. 2020 was the last significant economic downturn we
experienced. Many Americans became unemployed or underemployed.
However, divorcing in a weak economy could mean fewer assets for
couples to divide. It could also mean you could pay less in spousal
support, also known as alimony, or child support because your
income has diminished. You could also buy out your spouse’s
interest in an asset for a small fraction of what that asset would
be worth in a healthier economy. The flipside is also true –
you could receive lower spousal and child support than you
otherwise would, and you could receive far less in an asset buyout
than you would in a healthier economy. There is certainly no
definitive circumstance. How the economy affects your potential
divorce is entirely unique to you. There is no model template to
know when the best time is to file for divorce. The wisest thing
you can do is to talk with an experienced attorney.

Contemplations for the Salt-and-Pepper Divorce

In the past, I personally defined a “salt-and-pepper”
divorce as a marriage that ends after 25 to 35 years; these are
couples generally in their 50s and 60s. This is in contrast to
“gray” divorces, which is a term that is used for couples
who divorce in their 70s and 80s and have often been married for
the better part of their lifetimes. Parting ways with a spouse
after so many years together can provide the possibility of a fresh
start, yet it could also provide personal struggles and substantial
adjustments. The so-called Baby Boomers, who are also likely to be
“salt-and-pepper” divorcees, have the distinct honor of
being the last generation for which marriage was commonly expected
of them, though they were also the first to discard the stigma of
divorce itself. As time went on, it seemed fewer were willing to
tolerate growing old within an unhappy marriage.

Nevertheless, personal assets can be affected in an economic
downturn, and many older people may choose to stay together until
stock or home values go up again. It’s not at all clear whether
another economic downturn will accelerate salt-and-pepper divorces.
Indeed since 2020, it has been the case that couples are spending
more time together and may socialize less with others. It is
possible a troubled older couple could repair tattered bonds as
they work through their various adversities. Some data shows that
divorce rates actually fell marginally after rising for four
decades. Whether that indicates a reversal in long-term trends
still remains to be seen.

The Value of Your Assets

Economic conditions obviously have an impact on the value of
your and your spouse’s assets. This can be especially
challenging for couples going through a divorce. Whether they are
homes, investments, or even retirement accounts, assets are
typically divided based on the current market value. In 2023, it
may be possible that your portfolio could be worth less than it was
in previous years. This could be anxiety-inducing for people
planning on a divorce in the coming year. You may want to put off
divorce proceedings until a time when markets are better, however,
you may not have the choice and you may lose money. If you and your
soon-to-be ex-spouse are selling your home or any other property,
you may find that it could take longer and that you may not be able
to get the price you hoped for.

Though the economy may experience a downturn, it does not mean
you should not get out of an unhappy marriage. The economy may be
flailing, and inflation continues to feel out of control, yet this
does not mean you cannot experience a successful divorce. Ending a
marriage in difficult economic times simply requires more planning
and adjustments to how you handle your finances.

Advice on Sustaining Control and Avoiding Financial
Anxiety

In good or bad economic times, divorces can be an emotional
roller coaster, and the end goal will always be to move on and
regain control of your life. Maintaining control and overcoming all
the uncertainty and fear of financial distress in a divorce is not
in the hands of your ex-spouse; such accomplishments can only be
found in your own hands. In the end, it is all about control, and
how much (if any) of that you choose to surrender is up to you.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.