The average divorce today costs $15,000, according to legal guidance site Avvo, but that's pocket change compared with what it could cost in the long term.
"The money you'd put away to fund retirement together now has to cover two separate retirements," says New York City financial planner Dawn Brown. "This will be more expensive because it requires running two households."
Meanwhile, for many of the newly single, living costs rise relative to income, while discretionary spending remains the same -- leaving less room for the savings needed to catch up.
These steps can help you get to stable financial ground.
THE TURNING-POINT CHECKLIST
Well before the divorce
Know the score. Gather investment and bank statements, going back at least a year. Copy tax returns for income history. Pull your credit report to know what debts you have.
Consult a lawyer. In case you require counsel later and to learn about state laws. In nine "community property" states, assets acquired during marriage are owned fifty-fifty. In the rest, the court decides the split if it goes to litigation.
Open accounts in your name. Start stockpiling a cash stash for emergencies and legal fees. Apply for a credit card, too, while household income is higher.
Once the process is under way
Get the right help. Working out a settlement with a mediator may save money. But if your finances are complex or your relations contentious, an attorney can help you avoid mistakes or costly concessions.
Be strategic in getting your share. You may love the house, but if you give up investments of equal value, you lose the benefits of a balanced portfolio. You're often better off selling the house. In divvying up retirement funds, specify percentages vs. amounts, in case the market soars or tanks.
Take care of the kids. Be sure to specify in the settlement how you'll handle big costs, like braces, summer camp, and college. If you'll receive child support or alimony, insist that the provider get life insurance to ensure payments.
After the split is official
Stay insured. If you were on your spouse's health plan, the next cheapest option is likely your employer's offering. But if your ex's job has 20-plus employees, you can also continue coverage via COBRA -- so long as you notify the plan administrator within 60 days of the divorce. Or you can sign up through the Health Insurance Marketplace within 60 days.
Review your taxes. Usually only the custodial parent can claim kids as dependents. Give or get alimony? It's deductible to the payer, and taxable to the payee.
Make a new financial plan. Base it on your new income and household costs. You may have to up your retirement savings, both to rebuild what you gave up and to cover continued higher living costs in retirement. Use the T. Rowe Price Retirement Income Planner to revise your savings goal.
Restate your estate. Draft a new will to prevent your ex from inheriting, and name new beneficiaries on retirement accounts, pensions, and life insurance.
Sources: Family-law attorneys Jennifer Brandt of Philadelphia, Kelly Chang Rickert of Los Angeles, and Mark Chinn of Jackson, Miss.; Cheryl Jamison of the Association for Conflict Resolution; Mediate.com; divorce financial adviser Jeff Landers of New York City