Should I get a prenup? What if I’m retiring early?

Retire early

Should I get a prenup? What if I’m retiring early?

Early retirement is easier with two incomes but does it mean you need a prenup to protect your assets?

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Should I get a prenup? What if I’m retiring early?

Back at the start of COVID - 19, headlines flashed across my screens about countless couples in China who emerged from their quarantine cocoons and immediately filed for divorce. This is according to Daily Mail and Business Insider. I immediately looked at my husband across our dining-room-table-turned-desk, showed him the post, and told him we needed to have a game plan for what might be “four weeks or more” of intense time together. (Just four weeks? HA!)

His immediate reaction:

“We’re going to need to just give each other lots of space.”

My response:

“I’m going to need you to talk to me for at least 15 minutes an hour, every hour.”

I thought we might be doomed.

Today, we’re more than 100 days into quarantine and I’m relieved to report that, so far, we’re doing great. In some ways, it may have actually been the best thing to happen in our relationship since Blue Apron. But who knows what will come next? If we make it out of this with our marriage intact, we’ll know we’re at least ready for other isolation-esque events like being stranded on an island or retiring early as digital nomads.

This got me thinking—what would a couple who has achieved financial independence or has dedicated their lives to building a nest egg of that magnitude do if they got divorced? Or, what if someone achieved FIRE on their own and then decided to get married?

Example: Mr. Money Mustache’s divorce

After becoming famous for his financial achievements, Mr. Money Mustache’s divorce announcement shook the FIRE community in January 2019. I’m not going to speculate about the reasons why he and his wife split up mainly because I’m not a cold, bitter person who enjoys schadenfreude at the expense of real people with real children. But also because I could care less about his personal life and drama, this article is all about logistics people!

Mr. Money Mustache covered his divorce himself on a very sweet and sincere emotional level. True to his frugal form, he also shared that the separation process was so amicable that it only cost them the $275 filing fee! They achieved this level of thriftiness by avoiding hiring an attorney and going through the paperwork themselves. While Mr. Money Mustache’s divorce story seems about as best case scenario as you can get, the reality is that’s hardly the case for the majority of couples that part ways.

Fiction and online forums can provide a deeper look at real life relationship fall outs

Mr. Money Mustache, who did go through a divorce after becoming famous for his financial achievements, covered this on a very sweet and sincere emotional level, but what about from a logistical perspective?

Money is something most couples fight about and, if Netflix’s Marriage Story taught us anything, it’s that divorce a) is expensive and b) doesn’t always reflect the person you married. Lawyers can take an amicable separation and make it a downright nasty divorce. Once lawyers get involved, the game changes in drastic ways.

via GIPHY

Between the two, building a marriage that lasts a lifetime is a lot harder and takes a lot more work than building wealth to cover you for life. So, while it doesn’t take a rocket scientist to master personal finance, it does take a cover-your-ass attitude. I was curious about how ugly divorce can get and how prenups play a role for couples and decided to ask around.

Obviously, this is a tough topic to ask real people you know personally to honestly weigh in on, but, thanks to the internet, I didn’t have to go all Billy on the Street to get answers from strangers. I was able to ask the two groups I was most interested in hearing from about prenuptial agreements and divorce:

  1. A group of 52.000+ moms and other domestic engineers
  2. A group of 3,000+ personal finance experts

Here’s what I found…

What prenup means to one couple can be very different to another. For some, it can make or break a potential marriage, for others, it's just a logical part of planning a life together.

First, what is a prenuptial agreement? (Hint: Prenups aren’t as salacious as TMZ would have you believe)

A prenuptial agreement (also known as prenup, antenuptial agreement, or premarital agreement), is a contract that couples can use to outline the legal aspects of their marriage or civil union. Couples typically use a prenup to get more specific about how they want to treat the logistical parts of their legal union in ways that might differ from the laws in their county or state.

Usually when we think of a prenup in the US it’s in the context of a potential divorce but this agreement can also be in place to protect one or both spouses’ property in the case of something financially damaging like bankruptcy.

Couples who are already married can set up a postnuptial agreement after their marriage ceremony. This tends to be when something unexpected happens or during the early stages of a divorce when it’s better known as a “separation agreement.”

Why doesn’t every married couple have a prenup? Actually, they do…

If you’re married—SURPRISE—you have a prenuptial agreement. Erin Lowry, the author of Broke Millennial Takes on Investing and founder of the website, Broke Millennial says it best:

Everyone has a prenup. It defaults to the laws of your state.

So, if you’re looking to head down the aisle, or maybe you already have, it’s a good idea to read up on the marriage laws in your state and what they might mean for your relationship down the line. Most states have laws about the division of assets and property during a separation based on how long the marriage has been in place. If you already know a 50-50 split isn’t going to be easy to navigate, it would be a good idea to look into customizing a prenuptial agreement (or postnup) to save on legal fees down the line.

A lifelong legal agreement? Yeah, I want a contract for that. [Without one] they’re agreeing to the marriage laws of their state, and I’d guess 99% of the time people don’t actually know what those laws are. A prenup is making that commitment/contract on your terms

Every couple has a prenup—your state's statute. If you don't like that, and want to control your own life, get a prenup

“Marriage is about love and trust, but it’s also about the merger of assets” - Erin Lowry

Lowry nails it again with this quote from her interview with CNBC. It’s true, without a prenup of your own, all of your assets and other finances get mingled together as shared income or property—even if you file taxes separately or have separate accounts.

A lot of the time, combining assets as a couple can make both of your financial positions stronger. My husband and I did this before we got married and it made us look at our money differently right away. We were able to budget and save more individually and as a couple because we were looking at the whole picture as a household.

We also didn’t have assets that were worth all that much, which was also a constant theme in responses I received:

We both had nothing so nope

If I had enough money to protect its a 👍🏽

I was 22 and my husband was 25 when we got married, we had been together since high school...no need for a prenup

We are too poor for a prenup

But that’s not always the case.

Often and certainly later in life, couples come together from different backgrounds and financial histories which leaves things a bit lopsided. Here are a few expert tips and real-life examples:

Lawyer, Rebecca Green Neale shared:

My [stance on prenups] is the same as most of my legal answers: It depends. For people with no assets, no prior marriages, no children, and no expected inheritances, it’s probably not necessary. For everyone else, they should consider it.

Rebecca also shares how to prepare your finances for divorce on her blog—especially useful if you did not set up a prenup originally.

Other responses may not have been based on legal experience but they were based on logic:

Depending. If it is old family money then, yes. Also, if it is a very extreme amount that either of you have worked very hard for then, yes. Everything you have before the marriage belongs to that person and everything you make together is equal. If it’s a business that’s a big one. Example Bethany Frankel from skinny girl or the wife of the Amazon founder.

It’s a tough call. A ton of people have problems with [prenups] and it hurts their pride. But all in all if you know the relationship is real and you have trust then it shouldn’t be an issue. Definitely get a good lawyer and talk it out. It’s not to hurt anyone it’s there to protect.

It’s a tough call. A ton of people have problems with [prenups] and it hurts their pride. But all in all if you know the relationship is real and you have trust then it shouldn’t be an issue. Definitely get a good lawyer and talk it out. It’s not to hurt anyone it’s there to protect.

Being married before matters, but family and kids matter most:

If it’s a second marriage for both folks, I think it should be a given. Both should understand the financial ramifications of divorce. And for first marriages, it depends. If two kids just out of college with about equal debt and job opportunities get married, then really no need. You would be building a life together and starting from nothing. Now if there is a big variation in finances and assets, it’s probably better to consider it.

If I get married again, yes. I want to make sure to protect my finances for my kids and their inheritance. So no claims to my retirement, insurance, house, belongings etc.

If it’s a second marriage for both folks, I think it should be a given. Both should understand the financial ramifications of divorce. And for first marriages, it depends. If two kids just out of college with about equal debt and job opportunities get married, then really no need. You would be building a life together and starting from nothing. Now if there is a big variation in finances and assets, it’s probably better to consider it.

I believe if there is family money that’s not protected - then yes. Or if the couple is getting married later in life and have amassed a fair amount of money independently. I don’t think it means you don’t intend to stay together forever.

I come from money so I will not marry without a prenup. They aren’t what people think. After X years it is no longer in effect. But at the same time, inheritance money is protected if you keep it in a separate account. If you inherit money make sure to take the additional steps needed to protect it.

My aunt married later in life around 40 ish and the wedding almost didn’t happen because he wouldn’t sign a prenup. She worked her ass off her whole life to support herself and children and no man will ever take that away from her!

Popularity of prenups

It’s no secret that Gen X, Millennials, and Gen Z are waiting to get married later in life, but as the average age of brides and grooms goes up so do the number of couples filing prenups:

Waiting to Get Married

A 2018 survey reported 62% of lawyers said they saw an increase in prenup cases. As people put off marriage until later in life, it makes more sense that they’d also have a larger financial portfolio to their name making them all the more likely to want a prenup that protects those assets.

While there are many reasons people are waiting to get married—delaying adulthood, prioritizing careers, enjoying the dating scene—the reality of divorce isn’t lost on our generations either. Going into the idea of marriage knowing you have a 50-50 chance at being successful is all the more reason to have a prenup in place.

But there will always be the romantics out there...

Money is a part of marriage but relationships are about way more than finance

My initial hunch was that most of the responses would be about trust when it comes to marriage and prenups and many of them were. I tend to share this opinion, especially before I started my research on the topic.

Here are some responses that felt asking for a prenup might point to flaw in a relationship or defeat the purpose of a marriage all together:

I personally would not get a prenuptial agreement with my wife and it doesn't matter how much I’m worth. I believe relationships, especially with loved ones are above your finances. If you can't trust your spouse, don't get married.

I feel if you feel the need to have one don’t get married.

I think if you feel like you need to have a prenup...there’s no point in getting married.

I’ll admit that romcoms and Disney definitely played a heavy hand in my goals for a marriage. Because of such forces of culture and society, many of us believe that, in a good marriage, a couple puts love above everything else to face the world as a team.

I can’t say I’d be as heart-eyes-emoji blind if I were to go through a divorce or lose my husband and get remarried in the future.

The verdict: Should you set up a prenup or postnup if you’re retiring early?

After reading through the responses, I feel the answer to this question is an overwhelming YES. This answer is mostly based on the fact that if you don’t set one up, your state laws will dictate your marriage terms which was new information to me.

If you’re on the path to retiring early, you’ve without a doubt amassed an extreme level of wealth or income. That’s worth taking the extra steps to insure and protect. You may have also taken risks to build your wealth—especially if you’ve gone the entrepreneurial route. Protecting your spouse from that risk is important, and so is protecting that business from your spouse.

However, I say that with no disrespect for those of you who find it to be cold or heartless. If divorce isn’t in your marriage mindset, I get that and wish you all the luck and best times ahead of you!

No sample size is complete: How do you feel about prenups? Did your opinion change after reading through my findings? Share below because I want to know!

Retire earlyDomestic EngineeringFinancial Literacy

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Melissa Hollis
Melissa loves content, comedy, and all things West Coast. She is grateful to wake up every day with the chance to bring stories from unlikely sources to life and enable others to design and live the