Doctors facing divorce often fear the worst. In addition to the emotional impacts of divorce, they worry that their finances will be damaged beyond repair. Most physicians already work demanding schedules, so they may not be able to carve out any time to increase their income during and after the divorce – which is a problem if their ex is walking away with half of the marital assets. The concept of “income equalization” during divorce is fairly common, which means high monthly alimony payments are also likely.
So, if you know what you’ve got to work with, and you know there’s no chance of increasing your income, what can you do to prepare for the fallout of your divorce?
Focus On Minimizing Expenses
Physicians can begin preparing for divorce financially by understanding potential outcomes and adjusting their spending habits from the start. When we discuss physician divorces, we tend to speak about post-divorce finances in a very negative manner. It is true that many spouses of doctors end up walking away with substantial sums and high monthly alimony payments. But the fact of the matter is, rarely will a doctor be left without enough income to cover their basic monthly expenses after the divorce. Unfortunately, that doesn’t mean that your assets will continue to support your high standard of living.
Physicians get in financial trouble after their divorce for two reasons: spending too much, or not earning enough. Since you have a high-earning career, you will likely continue to earn what is necessary to support yourself. However, it may be time to look at what you’re spending and work toward decreasing your expenses. You should consider paying off all marital debts first, and then divvying up what’s left over. It may also be time to consider selling assets with high monthly maintenance costs: vacation homes, luxury cars, yachts, and more.
Back to Basics – Investments and Retirement Accounts
If you received advice about building your investments and retirement accounts when you were just starting out as a physician, it would be wise to revisit that information now. You’ll want to build your accounts in much the same way as a new graduate. However, you’ll also want to consider where you are at in your career when making these financial decisions. If you’re nearing retirement and your investments have dwindled because of the divorce, your approach may be different than if you were in your 30s. You have less time to rebuild your wealth, so it’s important to discuss investment strategies with a financial professional.
Male Physicians Can Overcome Divorce’s Challenges
The doctor divorce rate is not higher than the national average, which would lead one to think a doctor’s divorce may not be unique. This is far from the truth. A doctor’s high earning potential alone classifies his divorce as high-asset, which may also lead to conflict. Nevertheless, men and fathers who are physicians in New Jersey can overcome these extraordinary challenges and walk away from their divorce ready to start the next phase of life.