Inflation and Your Divorce

Inflation rates are the highest they have been in 40 years. Around the world couples are under pressure from today’s high costs of living. Many economists are discovering there is a surprising and ambiguous link between inflation and your divorce.

Inflation Divorce

Divorce and Inflation Trends

In the U.S., the annual inflation rate is 6.4 percent for the 12 month period which ended in January. Inflation in the United Kingdom peaked at 11.1 percent last October. The Euro area’s annual inflation is expected to be 8.5 percent.

For families, higher prices at the gas pump can fuel marital conflict and instability. Surprisingly, many economists have noted that in the population at large a high inflation rate can have two opposite impacts: (a) either cause marital break-ups, or (b) make people more appreciative of their marriages.

For example, in the 1980s, the last time inflation was high, divorce rates fell as the recession worsened. Then during the 2008 financial crisis, economists predicted sky-high divorce rates which never materialized.

Critics have pointed out that divorce rates had been soaring since the 1960s, when no-fault divorce laws were enacted. Previously, couples had to prove infidelity, addiction, dangerous behavior or another fault to obtain a divorce. But with the introduction of no fault divorce around the globe, divorce rates started to settle.

Another phenomenon is that across the world, marriage rates have been decreasing since the 1960s. In 1964, eight marriages for every 1,000 people across the EU. That figure dropped by over 50 percent in 2020. In the U.S., the marriage rate stood at six per 1,000 people of the population. This is a decrease from 1990 levels, when the marriage rate was 9.8.

Florida No Fault Divorce

The official term for divorce in Florida is “dissolution of marriage”, and you no longer need to prove fault as a ground for divorce. Florida abolished fault as a ground for divorce.

I’ve written about no fault divorce issues before. The no-fault concept in Florida means you no longer have to prove a reason for the divorce. Instead, you just need to state under oath that your marriage is “irretrievably broken.”

Before the no-fault divorce era, people who wanted to get divorce either had to reach agreement in advance with the other spouse that the marriage was over or throw mud at each other and prove wrongdoing like adultery or abuse.

No-fault laws were the result of trying to change the way divorces played out in court. No fault laws have reduced the number of feuding couples who felt the need to resort to distorted facts, lies, and the need to focus the trial on who did what to whom.

Inflation and your Settlement

The ambiguity around the connection between inflation and divorce is puzzling. Some economic analysts believe that the ability to divorce during inflation may simply be different among households depending on their individual economic status.

Inflation brings higher food, gas, electricity, and housing prices. These price increases impact low income families much more than they do high income families because food costs, electric bills, and gas prices represent a large percentage of lower income households.

Conversely, an increase in prices may even positively impact higher income families because they own more assets and have more expensive properties.

In your divorce, you may have a concern about keeping the marital home for the children. Many homeowners have adjustable rate mortgages – which used to have a small payment over a short-term. Now, however, adjustable rate periods may be ending and the cost of paying for your house can increase dramatically. The high prices for homes, the mortgage rate,. and the increasingly expensive cost of affording a home, can impact your decision to keep your home.

Alimony can also be impacted. There are various forms of alimony in Florida: both short-term, bridge-the-gap, and longer durational alimony. Divorce settlement agreements sometimes spell out guidelines for payments, such as decreasing or increasing the amount paid over time. In some cases, the adjustments in payments can be tied to the consumer price index generally, or fixed to the paying party’s income.

The Euronews article is here.