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Marriage makes monetary sense, analysis finds
Weary of the ties that bind? Here’s another reason to buck up and stay married: Those who divorce lose 77 percent of their personal assets, according to a study released yesterday by the Ohio State University.
“If you really want to increase your wealth, get married and stay married. On the other hand, divorce can devastate your wealth,” said study author Jay Zagorsky, an economist with the university’s Center for Human Resource Research.
He analyzed annual surveys from the U.S. Bureau of Labor Statistics that tracked the financial and marital status of 9,055 young adults from 1985 to 2000; the respondents were in their 20s at the start.
The findings? Marriage is simply good business. Couples don’t need Wall Street savvy to get ahead: Their worth increases by 4 percent each year “just as a result of being married,” because they combine assets and share a household, Mr. Zagorsky said.
According to the statistics, single people had modest growth in wealth during the 15-year survey period. On average, they started with less than $2,000 and ended with $11,000.
People “showed a sharp increase in wealth accumulation” after tying the knot, Mr. Zagorsky said, averaging $43,000 after a decade of marriage.
Those who divorce, however, enter a dismal financial state even before the decree is final.
“Divorce causes a decrease in wealth that is larger than just splitting a couple’s assets in half,” Mr. Zagorsky said. He found that couples who part experience a steady decline in finances up to four years before their split, with assets averaging $3,500 in the year before divorce.
“People may have separated before the divorce became official, which would help explain why wealth starts falling so early,” Mr. Zagorsky said. “Some 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.”
His analysis also revealed that divorce was hard on husbands and wives alike — neither made off with all the assets. Typically, men held 2 times the amount of wealth as their ex-wives after the break — a percentage deemed “relatively small” by Mr. Zagorsky in terms of cash — about $5,100.
“We can’t tell from these data the reasons why divorced people have so much less wealth than those who are married,” he said. “But the results are clear.”
The New York-based Association of Divorce Financial Planners cautions in a handbook: “If the matters of the heart seem complicated, they are nothing in comparison with the fiscal aspects involved with the legal dissolution of a marriage.”
Divorce also drains state funds. Utah state Rep. Peggy Wallace, a Republican, introduced legislation Friday to increase fees for divorces not involving domestic violence. Utah spends about $3 million processing divorces each year but collects less than $700,000 in fees.
“I don’t think the state should subsidize divorce. Period,” Mrs. Wallace told the Sutherland Institute, a conservative think tank in Salt Lake City.
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