The Financial Cost of Divorce

Photo by Atholpady.

In a recent opinion piece by economist Dave Denslow, entitled “Assessing the Costs of Divorce,” the author takes a wide-ranging survey of how money issues play out in a divorce.

He claims that it takes about $140,000 in income for former spouses, living separately, to create the same standard of living that an income of $100,000 provides. No citation is provided for this assertion.

According to recent US Census figures, $140,000 happens to be the household income number that puts you in the top 10% of households in the United States. But much depends on where you live. This interactive map from the NY Times helps you explore the location differences.

But let’s just assume that his assertion is correct: separately, you will need to earn 40% more to enjoy the same “standard of living” that you enjoy together. 40% is a big jump. How many of us can increase our earning power by 40% in one year? Basically, this translates into “both parties will have a reduced standard of living, after their divorce.” Plan on it. Whether the slump lasts, and for how long, is up to you both.

Original article in the Gainesville Sun, 06 September, 2015