Gray Divorce

Millions of American couples are now splitting up in middle age (or later). The rate of divorce after age 50 (often called “gray divorce”) has doubled in the U.S. since 1990.

This is despite a drop in the overall U.S. divorce rate.  The reason is mostly generational.  Many in their 20s, 30s and 40s are delaying and, in some cases, skipping marriage. Those who get married are more likely to stay together.

Impact of a Gray Divorce

A divorce after 50 can be particularly tough on your emotional and financial health.  It’s often far worse than divorcing at a younger age.  One study found that people who’ve gone through a gray divorce report higher levels of depression than those whose spouses died.

Getting a gray divorce is often a major financial shock.  Your wealth suddenly plummets – usually by about 50%.

Spendable income also often takes a plunge, especially for the lower earner after a gray divorce. One study found that women divorcing after age 50 saw their standard of living drop by an average of 45%.  And men saw their standard of living drop by 21%.

Recovering

Unfortunately, when you have a gray divorce, there’s much less time to recover financially.  And studies have shown that for most people, there’s no appreciable recovery in wealth or standard of living.  A spouse who spent years at home caring for children often finds it difficult to reenter the workforce or earn a good income.

Research suggests that the best way to recover from a gray divorce is to find a new spouse or partner.  This is true both emotionally and financially.  But finding a new partner is not easy for many.

Social Security aims to help keep seniors out of poverty.  But a divorced spouse can only access their former spouse’s benefits if the marriage lasted at least 10 years. And even then, the monthly benefit amount (if based on the former spouse’s entitlement) is only half what the former spouse will receive.

Gray Divorce Mediation

I’ve assisted many couples over 50 in coming up with an amicable divorce settlement.  Divorce mediation has many benefits and minimizes the drain on their resources.

Here are some of the main factors, issues and considerations that often arise:

• It may be necessary to defer retirement and work longer than expected.
• Training for a higher-paying job may be wise.
• Perhaps financial planning should be done to anticipate pre-retirement and post-retirement years.
• Divorce law does not require a spouse to keep working past their retirement age just to pay spousal support.
• Retirement accounts become more important and must be clearly understood along with their tax implications.
• It’s often necessary to reduce monthly living costs (and therefore perhaps the standard of living) to fit within the reduction in income.
• The marital home may now be larger than needed despite a possible emotional attachment to it.

The services of a Certified Divorce Financial Analyst may be helpful in working through the financial implications of your situation.