We all know that the stress of divorce can affect your health, but a new study from Ohio State University has found that the financial health of divorcees also takes a big hit. The study, published in the Journal of Sociology, found that divorce reduces a person's wealth by about 75 percent compared to that of a single person, while being married almost doubles comparative wealth (93 percent). And people who get divorced see their wealth begin to drop long before the divorce becomes final.
"Divorce causes a decrease in wealth that is larger than just splitting a couple's assets in half," said study author Jay Zagorsky. By the same token, married people see an increase in wealth that is more than just adding the assets of two single people. "If you really want to increase your wealth, get married and stay married. On the other hand, divorce can devastate your wealth," Zagorsky added.
Men and women who got married, and stayed married, showed a sharp increase in wealth accumulation after marriage. "Married people increased their wealth about 4 percent each year just as a result of being married, with all other factors held constant," Zagorsky said. For people who married and then divorced, there was a slow build-up of wealth during the early years of marriage and then a steady decline beginning about four years before divorce. Total wealth bottomed out the year prior to divorce.
"Many of these people may have separated before the divorce became official, which would help explain why wealth starts falling so early," Zagorsky explained. "Some people may also be working less and not trying as hard to build wealth as they have marriage troubles. Divorce is often a long and messy process, and you can see this in the four-year decline in wealth."
Interestingly, the results also cast doubt on the common assumption that divorce is significantly harder financially on women than on men. The results showed that the wealth status of divorced women wasn't significantly worse than that of divorced men, in terms of real money.
Zagorsky can't explain why marriage is so helpful in building wealth, and why divorce so devastating. But he speculates that married people can benefit because two people can live more cheaply than they could separately. In addition, because two spouses can share household responsibilities, they can each produce more than if they were single. "We can't tell from these data the reasons why divorced people have so much less wealth than those who are married, but the results are clear," Zagorsky concluded.
Source: Ohio State University
