Divorce, Net Worth and Early Retirement

[Meadbh]

Divorce = messy and expensive
Getting married in the first place = risk taking
Staying single = risk mitigation

You choose!

 

[haha]

Divorce = messy and expensive
Getting married in the first place = risk taking
Staying single = risk mitigation

You choose!

I would choose #3, but I am a few decades late.

Ha

 

[GMueller]

I’m not sure how to interpret the results. There are substantially more responders who have never been divorced who achieved a net worth of at least $1M by age 55. However, I’m not sure whether this establishes a “cause and effect” relationship, or whether the “never divorced” folks simply outnumber the “divorced 1 or more times” folks. I tend to believe that there is a correlation. In my own case, I reached the $1M threshold when the odometer turned 56. I suspect I could have reached that milestone about 10 years earlier but for 2 failed marriages. Has anyone else attempted to estimate how much their divorce(s) set them back in terms of achieving ER?

 

[Mr._johngalt]

Has anyone else attempted to estimate how much their divorce(s) set them back in terms of achieving ER?

I know exactly. My first divorce was final the same year I ERed
completely. Thus, our combined net worth was split 50/50, but I no longer
had to do the heavy lifting income-wise, support a high maintenance
spouse, nor a "keep up with the Jones" lifestyle. At that point it (ER)
became a no-brainer.

JG

 

[spark0506]

My divorce set me back financially at the time but long term and in so many ways it was a blessing. I would have never achieved any financial success had I stayed with her; no matter how hard I worked it wasn’t enough. Money isn’t everything by any means but having money problems can surely add fuel to the fire. She reminded me of Wilma in the Flintstones….”Charge”. Now my lovely wife of 15 years is my partner in every way, we’re a team and it’s as different as night and day. Together we reached the 1M figure a while back and we didn’t think much about it.

 

[astromeria]

My breakup was a powerful, positive force in achieving FIRE. My first marriage was very traditional (I didn't know what my husband was earning, for example), and its breakup forced me to return to the workforce. A few years later, my second husband encouraged me to get out of my mediocre-paid hourly job without benefits and into a professional job--I can't be sure I would've done that without his confidence in me. Second, I felt really determined to pay my own way in marriage #2 and not be financially dependent on DH2 to take care of myself or my children. Although DH2 always earned a lot more money than me, I was more consistently employed and a much better saver (I have twice as much as he does in rollover IRAs), and had decent stock options too, so I made half of our stash.

 

[SteveR]

Did not vote since my category is not included:

Divorced once; widowed once; remarried and had net worth of over $1M by age 45.


My divorce was my chance to start over with a clean slate and without somebody else working against my plan for FI and ER. Being $60,000+ in CC and other debt, paying child support, alimony and losing half your retirement benefits and being a single parent can make you a believer in LBYM and choosing a patner that is like-minded in financial issues.

Divorce is costly in many many ways but in the long run I am much happier and much better off financially now than I ever would have been had I stayed married to my first wife.

 

[bosco]

I have a friend that is not happy at home, for the past three years he's been talking about leaving. I sat down with him one day and showed him just how much it was going to cost him if he left, he decided it's not so bad at home and he's going to stay. He also agreed to marriage counseling.

marriage counseling is probably a good idea but far from a sure thing.

I realize we are all concerned about our net worth, and my divorce cost me plenty, but it was the best investment I ever made.

What good is money if you are miserable? If you stay in a marriage because it would cost you too much money to leave, you deserve to be affluent and miserable. It will likely affect your health and longevity. Staying in a marriage to save money, IMO, is the classic example of misplaced priorities.

 

[Nords]

Has anyone else attempted to estimate how much their divorce(s) set them back in terms of achieving ER?

I think that marrying someone who's starting at the same place you are, and staying married to them, enables the two of you to do in 20 years what might take one of you 40 years.

 

[GOJAGATORS]

Didn't answer the poll because I'm only 50, but my net worth is close to the 1 M mark and I'm not FIRE yet. Got divorced at 40, got cleaned out financially and started over with $5000, a six year old pick-up truck, but the big thing was that I got my business free and clear of the ex's reaches. Got stuck with a big child support payment that drained me really good for a while. It seemed to take forever to get back on track, but coming home every day and not having to deal with all the stress of my first marriage was worth every penny it cost me. I probably would be done with work by now, but starting over made me appreciate how good life is now.

 

[d]

Has anyone else attempted to estimate how much their divorce(s) set them back

... if you give me a few hours i could give you the exact number for the short-term set-back ... wasn't cheap, but sure was worth every penny. nonetheless, and more to the point, i expect my net worth is considerably greater than it would otherwise have been. the "divestment" was a good investment ... financially and otherwise. 'tis an ill wind that blows no good.

 

[Callie]

I married young the first time to a guy that was an anchor. After we had a baby I knew it would be a struggle for me to support him for the rest of our lives so I lfet him. This allowed me to get moving on my own and meet my 2nd hub 15 years later when I was all set financially.

 

[heyyou]

Many tough situations turn out to be beneficial in the long run.

The $ number in the poll does skew the results. Different people need different amounts of money.

 

[GMueller]

I began this poll because I was curious what effect divorce had on reaching ER. The results tend to show what I suspected, i.e., that divorce makes achieving ER more difficult. However, the results do contain one surprise, at least for me. I was surprised to find that the vast majority of responders who claimed a net worth of $1M or more, reached that milestone by age 55. There were very few who claimed to have achieved at net worth of $1M after age 55. I believe that the conventional wisdom is that net worth tends to increase, at least until the mid-60's. It appears that the responders were "early achievers," with very few "late achievers" among this group. I'm not sure what to make of this, if anything, but it is an interesting observation.

 

[Mr._johngalt]

I began this poll because I was curious what effect divorce had on reaching ER. The results tend to show what I suspected, i.e., that divorce makes achieving ER more difficult. However, the results do contain one surprise, at least for me. I was surprised to find that the vast majority of responders who claimed a net worth of $1M or more, reached that milestone by age 55. There were very few who claimed to have achieved at net worth of $1M after age 55. I believe that the conventional wisdom is that net worth tends to increase, at least until the mid-60's. It appears that the responders were "early achievers," with very few "late achievers" among this group. I'm not sure what to make of this, if anything, but it is an interesting observation.

Yes, that is "interesting". Looking back, I was an "early achiever"
but not ever a saver (ER late bloomer). Anyway, for the record,
if I had started when some of the youngsters here (with spousal
cooperation), I'd have hit 1M easily by 55. We just spent it.
No regrets though. It was quite a party.

JG

 

[Workwayless]

I voted in the poll 'Didn't Reach $1M Net Worth, but Retired Early, 1 Divorce':

I got divorced once and was nearly wiped out. However for me it was a positive situation: I was only 36 and had a career with good earning potential. In addition my ex liked to spend like there was no tomorrow. To contrast I am a natural spender. Every once in a while I would win but it was always a struggle. So post-divorce, I downscaled my lifestyle, began to save a great deal of my income and retired in my 40's. Since I lived on a small budget I was able to do so with less than $1 million net worth.

 

[Corporateburnout]

I began this poll because I was curious what effect divorce had on reaching ER. The results tend to show what I suspected, i.e., that divorce makes achieving ER more difficult. However, the results do contain one surprise, at least for me. I was surprised to find that the vast majority of responders who claimed a net worth of $1M or more, reached that milestone by age 55. There were very few who claimed to have achieved at net worth of $1M after age 55. I believe that the conventional wisdom is that net worth tends to increase, at least until the mid-60's. It appears that the responders were "early achievers," with very few "late achievers" among this group. I'm not sure what to make of this, if anything, but it is an interesting observation.

 

[astromeria]

I don't think these results show that divorce make FIRE more difficult.

A little more than 1/3 of poll participants have divorced. Although that's a lower rate of divorce than the national average, it's actually a little higher than the national divorce rate of college graduates. That tells me that, overall, divorce has no effect on ability of educated, motivated, above-average earners to FIRE. Or maybe that's what I want to see

 

[Workwayless]

I don't think these results show that divorce make FIRE more difficult.

A little more than 1/3 of poll participants have divorced. Although that's a lower rate of divorce than the national average, it's actually a little higher than the national divorce rate of college graduates. That tells me that, overall, divorce has no effect on ability of educated, motivated, above-average earners to FIRE. Or maybe that's what I want to see

I agree with you, astromeria. In my case, divorce didn't make FIRE more difficult. In fact it was just the opposite: divorce made FIRE possible.

 

[Mr._johngalt]

I agree with you, astromeria. In my case, divorce didn't make FIRE more difficult. In fact it was just the opposite: divorce made FIRE possible.

Ditto.

JG

 

[nun]

Marriage and divorce is best done early to get it out of your system and have time to recover financially.

I agree! I divorced at age 35 and it ended up being very good for my finances. We split $20k profit from the sale of the house and another $15k we had invested. My wife paid a lawyer to draw up the papers and represent her in court while I represented myself. We didn't have any arguments just split everything down the middle. To split the furniture etc we tossed a coin to decide who'd pick first and then just took turns picking things we wanted. My ex didn't want to bother with claiming half of the 401k/pension stuff which was about $50k back then even though both I and her lawyer advised her to - so that was a windfall for me. As a batchelor I've changed jobs and increased my earning power and lived far more frugally than when I was married. The control of my spending has allowed me to save at a greater rate than when I was married.

 

[Patrick]

Quote from: Workwayless on Today at 07:42:01 AM
I agree with you, astromeria. In my case, divorce didn't make FIRE more difficult. In fact it was just the opposite: divorce made FIRE possible.

Ditto.

JG

Double ditto.

 

[JonnyM]

Good poll. I'm hanging out there all by myself, as usual.

JG

Nope, not this time JG, in fact DW and I could each qualify for the bottom spot on the chart "independently"

 

[Mr._johngalt]

Nope, not this time JG, in fact DW and I could each qualify for the bottom spot on the chart "independently"

Man, you must have some war stories.

JG

 

[Delawaredave]

If:
- Before divorce: 2 people with 100% of the assets
- After divorce: 1 person with 50% assets

Then only the "duplicate" expenses of two people living separately drag down one's progress towards ER (minus "transaction costs" - lawyers, real estate commissions, etc).

I would guess the biggest impact is housing -- two divorced individuals tie up two separate houses and associated expenses -- versus two sharing one.

All other expenses are generally "proportional" to the number of people in the household - cars, food, etc.

I don't have any experiece with divorce, above is surely over-theoretical, and doesn't begin to consider kids and two spouses with unequal jobs.

Bottom line: divorce probably doesn't accelerate one's progress to ER.....