Divorce Rates Are Way Down Due to the Recession
Considering that money issues are the number one reason why people split up, you would think that the divorce rate would be through the roof right now due to the recession.
According to the National Center for Health Statistics, the divorce rate in the United States is on track to be the lowest since 1970.
What gives? You would think that with unemployment rates skyrocketing and home values on the decline that the divorce rate would be spiraling out of control.
Is the recession brings couples closer together?
Not a chance.
The fact of the matter is that people simply can't afford to divorce right now.
So instead, many estranged couples are choosing to continue to live together for the time-being due to economic reasons.
Divorce lawyers are expensive, and many couples simply don't have the cash lying around right now to afford one (or two).
Many American homeowners are upside-down in their mortgages, meaning that there are no real estate assets to divvy up. Even worse, many families owe more than what their home is worth due to the real estate plunge over the last couple of years.
Jobless rates are way up, and many families are having to survive on one income. This makes the possibility of maintaining two households nearly impossible for many families.
Real estate and equity values are way down, meaning that there are less assets to divide.
401(k)s have been plundered to make up for a drop in household income. Businesses have gone under. Household incomes have taken a substantial hit.
Back when the real estate market was booming, many divorces resulted in lucrative paydays. People were flush with cash due to a strong economy, a surging real estate market and an extremely solid job market.
Back then, a typical divorce might look like this - you have the house (that is worth 3x more than what we paid for it 5 years ago) and a monthly alimony check, and I'll keep the business and my 401(k) money.
Now it's completely different.
The house is "under water". The job market is horrible, which means that the family may have to survive on just one income. The 401(k) money is being sucked away every month. The list goes on and on. There are just not that many assets to divide right now, and many people are finding that this is a horrible time to think about getting divorced.
The takeaway - the divorce rate in the United States would be much higher right now if people could actually afford to get divorced.
Source: National Center for Health Statistics
Filed under: The Economic Meltdown