How To Prevent Divorce From Ruining Your Retirement Plans

How to prevent divorce from ruining your early retirement plans

Planning for retirement is a big ordeal in itself. Through a divorce on top of that and things can quickly spiral out of control. If your marriage isn't working out, it's crucial to know how to prevent divorce from ruining your retirement plans and finances.

Divorce is the #1 destroyer of wealth today, followed by overconsumption of things we don't need using debt.

Roughly 40% of married couples end up going through a divorce, which ultimately divides assets based on the wealth accumulated during the time of the divorce.

Kids Can Put Even The Strongest Marriages To The Test

Why do parents with kids divorce? It takes a village to raise a child. So splitting up may sound illogical if you aren't a parent. But, raising kids can push even the most patient people to their breaking point. Parenting doesn't work without a united front. And often couples don't discover how different they are until they try to raise kids together.

Marriage counseling and therapy are always good options to try and prevent divorce. Taking a temporary separation can also help each spouse reset and reflect inwards and on one another.

But, sometimes divorce is the only remaining option for a couple. People can change, become incompatible, and may need to separate to heal and regain mental health. That still doesn't make it any easier.

Not only does divorce split wealth, divorce is also very hard on an adolescent child. According to endless research, after a divorce, kids are likely to experience distress, anger, anxiety, and disbelief. Here are some of the emotional impacts a divorce may have on a child:

  • Young children often struggle to understand why they must go between two homes. They may worry that if their parents can stop loving one another that someday, their parents may stop loving them. Bird nesting can provide stability and emotional support for children if the parents are open to it.
  • Grade school children may worry that the divorce is their fault. They may fear they misbehaved or they may assume they did something wrong.
  • Teenagers may become quite angry about a divorce and the changes it creates. They may blame one parent for the dissolution of the marriage or they may resent one or both parents for the upheaval in the family.

When Divorce Is The Only Option

Despite all these facts, couples with children STILL can't prevent a divorce because they just can't take each other anymore. If you're constantly fighting in front of the children, you're probably doing more damage staying together than divorcing.

I understand how brutally difficult it is to be a full-time parent and to work at the same time. My days start at about 5:00am and often don't finish until 10pm with childcare, Financial Samurai duties, and investment tasks. There's never a moment to rest because one look away could spell disaster for my kids.

If divorce is your only option, you will likely have a rough, emotional patch ahead. But, you can come out stronger, healthier, and happier over time as you heal. You can also regain confidence in your finances by taking active steps to protect and grow your wealth for your new future.

How To Prevent Divorce From Ruining Your Retirement Plans

Here are seven important steps you can take to prevent divorce from derailing your retirement plans.

1) Building a large amount of passive income. 

Passive income is the holy grail for living a comfortable early retirement life. To do so, you need to build a large enough after-tax income portfolio that pays enough income to cover your expenses.

My wife and I currently have a goal of regularly generating $250,000 in passive income to account for the cost of private school tuition in expensive San Francisco.

The more passive income we have, the less financial stress we will experience. Financial stress is the #1 reason why couples fight. Fight too much and you won't be able to prevent divorce.

Financial Samurai passive income investments 2023 - how to prevent a divorce

Related: Ranking The Best Passive Income Streams

2) Develop an outside support group. 

Life can get a little suffocating since we are two retired stay at home parents. It's important that both my wife and I find regular social outlets outside of the house to keep our sanity.

For me, it's playing tennis and softball. I might even find some part-time consulting work outside the house twice a week. For her, it's dance and arts and crafts.

As an extrovert, it's much easier for me to make friends compared to my wife, who is an introvert. But as an extrovert, staying at home all day is harder on me than it is on her.

It is key for both she and I to have outside friends as an outlet for fun and discussion. Although I'm sure we all love our spouses, having separation is extremely healthy.

There is a growing loneliness epidemic, especially post-COVID. If you have a lonely spouse, they might have a greater tendency to cheat. As a result, it's important to have a strong circle of platonic friends to help prevent a divorce.

3) Always be communicating.

Marriages take work. We must continue to speak our minds when something is bothering us and find solutions to our problems. It's important NOT to let issues fester.

Uncommunicated expectations may be the leading cause of divorce. 

One partner expects the other partner to do something, but the other partner doesn't because they have no idea. As a result, the partner with the expectations starts to grow resentful of the other partner's lack of action. 

The best solution is often a compromise. Listen to your spouse's needs, instead of just thinking of your own. Ask for your spouse to share her feelings immediately after you notice something wrong.

Communicate, communicate, communicate! Destroy the ambiguity! When in doubt, spell it out.

4) Create boundaries. 

If you want to better prevent divorce, you must creat boundaries. Do your best not to bring your work home to your spouse and vice versa if you are a stay at home parent. Letting someone who wronged you that day spillover to negatively treat your spouse is toxic.

Make an agreement that once you step in the door, you start new. Take some time to unwind. Then start communicating.

My goal is to continue waking up two hours before my wife and kids wake up on average. I work as hard as I can during this time period, and STOP the moment I hear them up. I'll only do work again once they take a nap or after our the kids go to bed around 8:30pm.

5) Forgive and ask for forgiveness. 

Nobody is perfect. Recognize this fact. If you do something wrong, ask for forgiveness. Building resentment and anger isn't healthy for anyone whether you can prevent divorce or not. If your spouse does something wrong, grant forgiveness. Give each other forgiveness credits!

I give my spouse forgiveness credit for inadvertently scaring me in the house all the time. But it's just so I can scare her back when she's not looking. It becomes a fun game.

Divorce by race
Divorce is a wealth destroy

6) Be kind and recognize effort. 

The worst thing we can do as spouses is ignore our spouse's efforts. Let us tell our significant others every night how much we care and appreciate them. Let's highlight specific reasons for our appreciation, rather than a blanket statement.

It is also important for us to be consistent in our mannerism. So much of life is a public show due to the internet and social media. We can't treat our spouses with respect and love in public, and then privately berate them and take them for granted.

7) Consider keeping separate finances.

One of the reasons why a spouse can get resentful is if he or she always feels like he or she has to ask for permission before spending money. As someone who left the workforce in 2012, it seems weird to me that we have to take direction from other adults.

By having your own separate checking or savings account, this strategy helps relieve this pressure as nobody likes asking for permission, especially as a mature adult.

If keeping separate finances is too extreme, then create a third account for free spending. The third account can be treated as a savings account that is built up over time to be spent on whatever a spouse desires.

8) Be congruent with your beliefs and your actions.

Recently, I realized a blind spot when I realized I'm not “father of the year” material. For so long, I thought the reason why my kids almost always behaved well with me was due to my abilities as a father.

What I realized was that they are better behaved compared to when they are with their mom is due to me taking them to fun places all the time. In comparison, my wife has to do all the less-fun things with them, like brush their teeth and eat vegetables.

To reduce your chances of divorce, each spouse must have a tighter alignment of who they think they are and the actions they take. Otherwise, the marriage will start to crumble.

Don't Let Divorce Hurt Your Retirement Plans

Just as we must constantly stay on top of our finances, we must constantly work to improve our relationships with our significant others. A divorce will most likely hurt your retirement plans.

We must not take our spouses for granted. Recognizing effort and respecting each other are keys to a healthy marriage.

But if you're not able to prevent divorce, all is not lost. Even very wealth and successful people get a divorce, so don't feel bad. You can grow into a better, healthier, and happier person.

We should all remind ourselves that none of us are perfect. And as long as we can forgive each other for our transgressions, I believe more marriages can flourish than fade.

Further Reading

Recommendation For All Parents

If there's one thing the pandemic has taught us, it's that life is not guaranteed. If you're a parent, you should agree we must do everything we can to protect our children while they are still dependents.

As a result, please get life insurance. Not only should you get enough life insurance to cover your liabilities, your life insurance term should last long enough to get them through college.

The best place to get life insurance is through PolicyGenius. PolicyGenius will help you find the best plan for the lowest price tailored to your needs. Get free, no-obligation quotes so you can get the best rate to protect your kids. 

In the past, you would have to get a life insurance quote by applying to individual carriers – the process was completely opaque. Now, you can have multiple qualified life insurance carriers compete for your business after applying on PolicyGenius. It's so much more efficient! 

Getting Similar Coverage As Two Stay-At-Home Parents

After eight years of owning life insurance, my wife decided to check on PolicyGenius for free to see if should could do better. Lo and behold, my wife was able to double her life insurance coverage for less money.

If you don't have life insurance, please get life insurance before you need to. Life insurance gets more expensive the older you get. If you get sick, depending on the severity of your sickness, you might not be able to qualify.

If you already have life insurance, I also highly recommend checking PolicyGenius to try and get a better deal. Chances are high you're not getting the best terms. 

Recommendation To Build Wealth

It's also important to stay on top of your financial health. Empower, the web’s #1 free wealth management tool to get a better handle on your finances.

Run your investments through their award-winning Investment Checkup tool to see exactly how much you are paying in fees. I was paying $1,700 a year in fees I had no idea I was paying.

After you link all your accounts, use their Retirement Planning calculator that pulls your real data to give you as pure an estimation of your financial future as possible using Monte Carlo simulation algorithms.

Definitely run your numbers to see how you’re doing. I’ve been using Personal Capital since 2012 and have seen my net worth skyrocket during this time thanks to better money management.

Planning for retirement when paying for private grade school
Personal Capital sample retirement planner calculator. Are you on track? Click to find out.

About the Author: Sam started Financial Samurai in 2009 as a way to make sense of the financial crisis. He proceeded to spend the next 13 years after college working in finance. In 2012, Sam was able to retire at the age of 34 due to his passive income investments. He spends time playing tennis, taking care of his family, and writing online to help others achieve financial freedom.