The rate of divorce has doubled for Americans over 55 since 1990, and for those over 65, it has even tripled.
A New Marital Reality?
In terms of finances, few individuals going through a “gray divorce” end up in a better position. A significant increase in gray divorce has been observed in recent years, according to federal data, while the divorce rate among younger Americans has decreased.
Why Are More Seniors Divorcing?
“One in 10 people getting divorced today is 65 or older. That is remarkable,” notes Susan Brown, a renowned sociology professor at Bowling Green State University, Ohio. “A growing share of aging adults will be aging alone.”
Researchers attribute this trend to various demographic factors, including an aging American population, longer lifespans with healthier living, and later marriages.
The Steep Price of Late-Life Divorce
Gray divorce comes with a hefty price tag.
Divorce, in general, is financially draining, but for older Americans, the impact is even more severe. Elizabeth Windisch, a Denver-based certified financial planner, observes, “I haven’t seen a scenario in which either partner is better off financially.”
Gender Financial Gaps
Research conducted by Brown and her team indicates a stark reality: post-divorce, men see a 21% drop in their standard of living, while women experience a staggering 45% drop.
Both parties see their wealth cut in half.
A Tougher Hit for Women
According to Brown, women are more likely to initiate a gray divorce but often end up worse off financially. They tend to assume child custody and its associated costs and typically have lesser work experience than their ex-partners, limiting their earning potential.
Retirement Risks
Older Americans facing a gray divorce encounter substantial financial hurdles, particularly regarding retirement planning. The core issue lies in the division of retirement accounts, which can leave both parties with significantly less savings and little time to recover.
The solution? Draft a new financial plan. For those yet to retire, ramping up savings is crucial to refill those depleted retirement funds.
Fair Split?
Despite the seeming fairness of splitting retirement savings, the additional costs associated with divorce – securing new housing, finding affordable health insurance, and covering legal expenses – can quickly escalate.
A Financial Strain
Michelle Crumm, a financial planner from Michigan, addresses the doubled expenses in gray divorce, citing a client, a high-earning executive, who had to split her 401(k) and pay alimony to her stay-at-home husband.
Despite a substantial salary, her finances were stretched thin.
Financial Replanning
Crumm advised her to focus on rebuilding her retirement savings, suggesting lifestyle adjustments like buying instead of leasing a car and choosing more affordable vacations.
Back to Work?
Navigating post-divorce finances can be tricky, especially if you’ve been out of the workforce for a while. The challenge? It’s tougher to earn a decent income after a divorce when you haven’t worked in years.
The solution is to assess whether you can live comfortably without returning to work, albeit on a tighter budget.
Can Divorcees Live Jobless?
This situation was all too real for a client of Patti Black, a financial planner in Birmingham, Alabama. The client, in her 50s and facing a divorce after three decades of marriage, hadn’t worked in 25 years.
Selling the Dream House
Realizing she couldn’t earn close to what her husband did, Black helped her plan a life without a job return, which involved selling her dream home for a more affordable living situation.
She’s now in the process of selling that house.
The Marital Home
Deciding the fate of the marital home in a gray divorce is a major dilemma. The key is to weigh the costs of ownership and upkeep before deciding who gets the house, if anyone. With issues like inheriting mortgage payments, property taxes, insurance, and maintenance, the home can be as much a liability as an asset.
New Mortgage Hurdles
Refinancing or purchasing new homes in 2024 might mean higher interest rates, posing a significant challenge, as Monica Dwyer, a financial planner in Ohio, notes. If finances are tight, downsizing might be the answer.
More Than Just Money
Beyond this, gray divorce also brings complications in areas like Social Security, health insurance, and debt. Patti Black advises considering the costs carefully, and perhaps opting for marital counseling over divorce.
Read Next: What Really Causes Donald Trump’s Skin to be So Orange
Former President Donald Trump’s distinctive orange skin has captivated attention, sparking curiosity about its evolution from average pale over the years:
What Really Causes Donald Trump’s Skin to be So Orange
27 Things MAGA Movement Ruined Forever for People
How the MAGA movement left its mark on individuals and disrupted certain aspects of our everyday life forever:
27 Things MAGA Movement Ruined Forever for People
Court Finally Unseals Secretive Case of Jan 6 Offender
Samuel Lazar sentenced for Jan. 6 insurrection; previously confidential case now revealed: Court Finally Unseals Secretive Case of Jan 6 Offender
Defamation lawsuit against Kari Lake advances while people compare her to Rudy Giuliani
Kari Lake loses First Amendment right to accuse Maricopa County recorder; Arizona Republic ponders if she’s channeling Rudy Giuliani in her sleep : Defamation lawsuit against Kari Lake advances while people compare her to Rudy Giuliani
More Democrats are flipping in a crucial swing state than Republicans
In Pennsylvania, a significant number of registered Democrats flipping is sending an unflattering signal to President Biden: More Democrats are flipping in a crucial swing state than Republicans