So I divorced with kids, and as a point of perspective yes it is a setback to retirement in the traditional sense, which was the path I was on at the time of the divorce, not having yet discovered the MMM site and really honing on on this methodology. That's not to say I was not frugal (it was just one point of contention that led to our divorce as I was frugal and she was spendy) or focused on retirement. I started contributing to and IRA with my first paycheck when I was 16, saved enough for a 20% down payment on a townhouse by the time I graduated college, which I did debt free by working full time while getting my bachelor's.
When we divorced we split the retirement funds in half. She ended up being a SAHM most of the time, only having part time retail gigs or MLM home based gigs along the lines of Tupperware parties etc., when she wanted to try something but none of those ever ended up being more than a year and she worked maybe a total of three years in the time we were married (16 years). She did not have any degree, so her earning potential was substantially less than mine, she did not like working (still does not), and was fine staying at home once we determined that it basically cost money to have her go to work (daycare cost more for the kids than what she made anywhere she got a job). While on paper our divorce was amicable (was a dissolution done in about 90 days and about $2,000 in fees for an attorney to do the work), my concern was for the kids well being so I ended up giving up all my home equity in the process to avoid reopening the financial debates and possibly risking the visitation schedule. I'll stay away from the drama of the whys and wherefores as they really have no financial point, but am happy to discuss with anyone if it will help for whatever reason. How the finances ended up working, was I had agreed to keep the house to give the kids stability of mot having to move, but then I owed her 50% of the equity. About month in the kids and I had determined that the only person who liked the house at all was the only one no longer living in it, so I decided to sell it. The attorney suggested we go back and modify the divorce decree to now sell the house (we had not finalized the process in court yet) but I chose instead to take the financial bath. Given that I sold the house in 2011 in the middle of the housing crisis I sold for less than what we paid for it a year before, so I lost part of my equity there, and then had the real estate fees which ate everything else up and then some of my (non-retirement) savings. I still paid my ex her half of the equity based on what was there before, so this cost me another $60K, which put he division of remaining assets when we split more in the neighborhood of 40% me/60% her.
At that point in my life those assets had taken 24 years to accumulate. 22 of those years were spent either dating or married to my spendy ex.
I am now remarried with a frugal spouse. We're not on par with MMM and Mrs. MMM with frugality but we try hard and do not waste a lot, but we certainly indulge in some extravagances like many on this forum. I am now 8 years out from the divorce and our net worth is 4 times what it was at the time of the divorce, so that provides some perspective on how much difference spending can have. Likely preaching to the choir here. Also to show the economic impact, in my remarriage we added the cost of three additional children the the three I had, and we were still able to make that type of rapid improvement in the situation. Now targeting FIRE directly, we are about 50% to our target amount. The amount that my ex received in the divorce was $170K so if I had that back we'd be about 75% to our target amount, so that was the economic impact of my divorce. How you calculate the removal of the spendy spouse though is more complicated. Yes, my earning rate had gone up in the 8 years but not 4x as our savings have. Our savings rate was in the single digits before I got divorced. It is not anywhere near real FIRE targets now but we tend to hit 20-30% any given year.
Having six kids is a big part of that savings rate impact. They kids could obviously care less about our FIRE plan. They therefore had costs that a lot of kids do including activities, college, etc. They were less interested in maximizing their cell phone savings. My point is, we target the most frugal solution for a given expense we can while keeping sanity and grumbling to tolerable levels. We do not have an unlimited cell phone plan, we share 10GB between now 6 phones, but at one point it was 8. We have three cars so we can give the kids some freedom and avoid my wife and I having to drive them everywhere. We have to insure a lot of drivers on those three cars (4 right now, but could still be six of us is they all get their license). We are blessed to have a high income right now, but that can change at an employer whim. As we plan our FIRE trajectory we are targeting a level that is 33% of the level we have coming in right now. We'll not have the kids around, we'll have the house paid off and my wife and I do not long after the same things our kids do (they all pay for Spotify subscriptions for example, we just listen to the radio). Having kids involved has a significant impact on your FIRE situation, especially in a divorce. Both our exes contribute next to nothing to any of the kids so we buy all the clothes, pay for all the health care, etc., pay for their activities. They feed them when they are there, so that is for the most part the extent of the contribution. If it were just my wife and I we could likely be FIRE or very close to it today after starting down this path in earnest in 2015. Instead our target is likely 9-10 years from now. A big part of that is our decision to assist with college costs, which lower our saving rate by at least 15%, but in 2017 by 25% (we have a target amount to save, but if we have extra money we save it in the college funds right now. If they do not get used we can always reclaim that back into our stache. We've sent a very clear message to all the kids that we are not obligated to give them a dime for this, so nothing is locked in). We'd be at a 35-55% saving rate otherwise.
So that's what my economics of divorce and beyond look like so far.
