Recessions can take anyone by surprise. Many different economists have been predicting a recession for months now, though whether it is for a long or a short downturn, and when exactly it may fall upon us, is entirely up for debate. This is the cyclical nature of the economy. Although 2023 may be a challenging in various ways, your main challenge could be controlling your fear.
In my book, Divorce: It’s All About Control. How to Win the Emotional, Psychological and Legal Wars, I underscore just that: control. A spouse who can control their anxiety, even in financially stressful times, can control the outcome of their divorce. This mindset is key to avoiding long-term emotional damage and will help you (ideally sooner rather than later) move on in a positive light.
The Many Effects of an Economic Downturn on Divorce
If any spouse is considering a divorce in a potentially harsh economy, they must look at their specific situation to determine if they should proceed with a divorce or wait until better economic times return. 2020 was the last significant economic downturn we experienced. Many Americans became unemployed or underemployed. However, divorcing in a weak economy could mean fewer assets for couples to divide. It could also mean you could pay less in spousal support, also known as alimony, or child support because your income has diminished. You could also buy out your spouse’s interest in an asset for a small fraction of what that asset would be worth in a healthier economy. The flipside is also true – you could receive lower spousal and child support than you otherwise would, and you could receive far less in an asset buyout than you would in a healthier economy. There is certainly no definitive circumstance. How the economy affects your potential divorce is entirely unique to you. There is no model template to know when the best time is to file for divorce. The wisest thing you can do is to talk with an experienced attorney.
Contemplations for the Salt-and-Pepper Divorce
In the past, I personally defined a “salt-and-pepper” divorce as a marriage that ends after 25 to 35 years; these are couples generally in their 50s and 60s. This is in contrast to “gray” divorces, which is a term that is used for couples who divorce in their 70s and 80s and have often been married for the better part of their lifetimes. Parting ways with a spouse after so many years together can provide the possibility of a fresh start, yet it could also provide personal struggles and substantial adjustments. The so-called Baby Boomers, who are also likely to be “salt-and-pepper” divorcees, have the distinct honor of being the last generation for which marriage was commonly expected of them, though they were also the first to discard the stigma of divorce itself. As time went on, it seemed fewer were willing to tolerate growing old within an unhappy marriage.
Nevertheless, personal assets can be affected in an economic downturn, and many older people may choose to stay together until stock or home values go up again. It’s not at all clear whether another economic downturn will accelerate salt-and-pepper divorces. Indeed since 2020, it has been the case that couples are spending more time together and may socialize less with others. It is possible a troubled older couple could repair tattered bonds as they work through their various adversities. Some data shows that divorce rates actually fell marginally after rising for four decades. Whether that indicates a reversal in long-term trends still remains to be seen.
The Value of Your Assets
Economic conditions obviously have an impact on the value of your and your spouse’s assets. This can be especially challenging for couples going through a divorce. Whether they are homes, investments, or even retirement accounts, assets are typically divided based on the current market value. In 2023, it may be possible that your portfolio could be worth less than it was in previous years. This could be anxiety-inducing for people planning on a divorce in the coming year. You may want to put off divorce proceedings until a time when markets are better, however, you may not have the choice and you may lose money. If you and your soon-to-be ex-spouse are selling your home or any other property, you may find that it could take longer and that you may not be able to get the price you hoped for.
Though the economy may experience a downturn, it does not mean you should not get out of an unhappy marriage. The economy may be flailing, and inflation continues to feel out of control, yet this does not mean you cannot experience a successful divorce. Ending a marriage in difficult economic times simply requires more planning and adjustments to how you handle your finances.
Advice on Sustaining Control and Avoiding Financial Anxiety
In good or bad economic times, divorces can be an emotional roller coaster, and the end goal will always be to move on and regain control of your life. Maintaining control and overcoming all the uncertainty and fear of financial distress in a divorce is not in the hands of your ex-spouse; such accomplishments can only be found in your own hands. In the end, it is all about control, and how much (if any) of that you choose to surrender is up to you.