Most New Yorkers see divorce as a situation that negatively impacts their financial health. However, there are some little-known financial benefits you can enjoy as a divorced person. These are a few notable examples.
Early access to your retirement fund
When you divorce, you’re able to withdraw funds from your retirement account early. This is possible if you have a qualified domestic relations order (QDRO) as part of your divorce settlement. As long as you make your withdrawal when you’re at least 59 1/2 years old, you won’t have to worry about penalties. You’re still responsible for paying taxes toward the money unless you deposit it into an IRA account, however.
More financial aid for college
If you have children, your divorce can benefit them financially as well: You can secure more financial aid for your kids once they’re ready to attend college. If you’re the custodial parent, your financial information must be included in your child’s Free Application for Federal Student Aid (FAFSA).
Control over your finances
Being divorced gives you full control over your finances. You will no longer have to worry about the constant fighting with your spouse over how to spend your money, how to budget and racking up credit card debt. Not only do you have the freedom to do what you want with your finances, but you can also more easily create a budget that you can stick to for your spending.
Avoid certain taxes
Married couples who have a higher joint income must pay higher taxes. If you’re divorced, these do not apply to you. Some couples deliberately divorce to save hundreds or even thousands of dollars each year.
These surprising financial benefits can help you sleep better at night. You can feel more secure about saving money.