The Financial Impact of Divorce: More Than "Half"
 

The old saying "if you get divorced, you give your spouse half" is more myth than reality. According to an ongoing study led by research scientist Jay Zagorsky of the Ohio State University Center for Human Resources Research, the financial impact of divorce can be far more severe. In fact, the study suggests that divorced individuals often lose closer to three-quarters of their wealth.

Zagorsky’s research has tracked the wealth and marital status of 9,055 people since 1985, with participants now aged between 45 and 53 years. While these findings may not perfectly align with other age groups or countries like Australia, there are enough cultural and human behavioral similarities to make the results relevant and thought-provoking.

The Stark Reality of Wealth After Divorce

The interim findings reveal that married individuals accumulated 93% more wealth than their single or divorced counterparts—a staggering statistic. Zagorsky attributes this disparity largely to economies of scale, stating that “one household is cheaper to maintain than two.” Divorce, on the other hand, is described as “one of the fastest ways to destroy your wealth.”

The study further highlights that financial decline often begins four years before a divorce is finalized, likely due to the costs of maintaining two households during separation. This financial strain has long-term consequences for both men and women.

Men vs. Women: Post-Divorce Financial Outcomes

While men tend to fare better than women in financial terms post-divorce, the gap isn’t as wide as it seems. Men reportedly hold 2.5 times the wealth of their ex-spouses. However, the study also reveals a sobering reality: the majority of divorced men and women end up with net assets worth less than $15,000 (excluding retirement benefits). This highlights that neither gender fully recovers financially after a divorce, underscoring the lasting economic challenges it creates.

Lessons to Consider

1. Marital Wealth Benefits: The financial benefits of marriage—such as shared expenses and pooled resources—should not be underestimated.
2. Divorce Preparation: Understanding the financial implications of divorce is critical. Couples might consider prenuptial agreements or thorough financial planning before separation.
3. Post-Divorce Planning: Seeking financial advice post-divorce can help individuals rebuild their wealth and plan for the future.

The findings of this study serve as a reminder of the economic realities of divorce and the importance of proactive financial planning for both married and separated individuals.