Note: This article originally appeared in the October/November 2015 issue of New England Woman Magazine.
If you are considering a divorce, or already divorced, you may be wondering about returning to work, getting a new job or even just increasing your hours. Divorce almost always involves some element of financial strain. Maintaining two households on the same income that recently supported one household is challenging. For some women, the financial issues have more of an impact – especially if your spouse was the primary wage earner for your family.
During stressful times, we seek support from friends and family. Use caution however, as the advice you receive – even though well-intentioned – may be wrong.
A common example we see involves a scenario such as this (some assumptions were made for the purposes of brevity, such as including an amount for medical insurance when determining the Massachusetts child support figures used in this example):
Background: Daphne has two school-age children. Daphne left her job as a sales manager earning $75,000.00 eight years ago and has been out of the workforce since, except for working a few hours at the local library each week. Daphne is separated from her husband Fred, a private investigator, earning $135,000.00. Fred travels frequently for work (in his cool mystery van), so she handles about two-thirds of the parenting time, sometimes more, each week. Fred and Daphne started the divorce process, and Daphne is worried about her standard of living and providing for the children with the least amount of disruption. Daphne reviewed the child support guidelines prepared by the divorce mediator she and Fred are working with, and she will get $605.00 per week in child support, or $31,460.00 per year. Child support income is tax-free.
Issue: Through some effective networking, Daphne has a job offer with a starting salary of $55,000.00, including benefits. The location is good, and there is some flexibility in her schedule if needed. Daphne's close friend, Velma, was divorced two years ago. Because she is divorced, Velma feels qualified to give Daphne legal and financial advice. During dinner, and after a couple of glasses of wine, Velma tells Daphne she is crazy to take this new job, because her child support will decrease, or even that could lose her child support!
Question: Should Daphne take this job, or is she better to hold off and maximize her child support from Fred?
Answer: Daphne is getting really bad advice from her friend. Let's consider why Daphne is much better off taking this new position.
Looking at the Numbers – How Less Child Support Amounts to More Money Overall
· As mentioned above, Daphne would receive child support of $31,460.00 per year without any other earned income of her own.
· If she was earning her own income of $55,000.00 from the new job, Velma is correct that Daphne's child support will decrease – but only by $56.00 per week – making the new child support amount $28,548.00 per year.
· Thus with the new job, Daphne's income is $83,547.88, and the child support portion remains tax-free income.
Other important considerations exist to further support Daphne's decision to return to the workforce:
· What if Daphne was relying solely on child support income from Fred, and Fred lost his job? Daphne is at risk of having a major impact on her finances if all of her income is tied to Fred.
· If Fred did lose his job, there are fewer health insurance options for the family if Daphne has employer-sponsored coverage available.
· Daphne's financial future is potentially much better, as she may receive promotions, start adding to her retirement savings, etc. In fact, she lands a promotion in 8 months and a nice raise. Bringing home the bacon, frying it up in a pan.
· Daphne gets to talk other actual human adults in her career. She makes some new friends.
· Daphne has increased opportunities for herself and her children. With more income, she can qualify for a mortgage and buys a house in a year.
You go, Daphne!
Research shows that women working outside the home post-divorce are more financially secure, enjoy a better quality of life, and report less depression and anxiety. Another take away is to make sure you get good advice from legal professionals specializing in divorce and family law. Family and friends are just trying to help, but every situation is different and their suggestions may be the exactly wrong thing for you.
Nothing in this article should be considered legal advice. Every situation is different, and if you have a divorce, child support, or related issue, you should obtain advice from a lawyer.
Stephen McDonough is a divorce and family law attorney and certified mediator. He is the owner of Next Phase Legal LLC in Medfield, MA.