Understanding the Rise of Gray Divorce: Key Insights for Women

The trend of filing for divorce after the age of 50 is growing. Here are essential strategies for navigating gray divorce in 2023.

While celebrity breakups often capture headlines, the legal community is buzzing about the rise of gray divorce. One in three divorce filings in the U.S. is from individuals over 50, as highlighted by the Journal of Gerontology. Additionally, the American Bar Association reports that this age group constitutes a quarter of all divorces.

“Gray divorce involves couples who have often spent decades together,” states Geeta Brana, a financial expert from Holmdel, New Jersey, who aids women in managing financial hurdles. She refers to it as a “financial bombshell” and advises women to be prepared. “Even if your relationship seems secure now, circumstances can change dramatically over many years.”

According to the CDC, nearly 50% of first marriages and 60% of second marriages end in divorce. While the emotional toll can be severe, the financial repercussions can be equally significant.

“Understanding your financial situation is crucial,” says Seta Keshishian, a CFP at JSF Financial in Los Angeles who often advises women. “Establish an emergency fund covering three to six months of expenses, and familiarize yourself with your investments, insurance, and tax responsibilities. Don’t wait until after the divorce to connect with a financial adviser.”

Whether you’re newly married or have been in a long-term relationship, consider these factors to safeguard yourself during a gray divorce:

Your Life Expectancy

The average life expectancy for women is approximately 87 years, as noted by the Society of Actuaries. Therefore, how much savings do you require for your lifetime? A “single-view” financial plan can provide a clear assessment of your financial health, independent of your partner. Reviewing this plan helps you evaluate, “Could I sustain myself?”

“Collaborate with a financial specialist to create a plan that only includes your retirement savings and income sources,” advises Brana. This strategy prepares you for potential expenses, including divorce attorney fees ranging from $300 to $1,000 per hour.

Debt Management

“Many women are shocked to discover they share responsibility for all debts incurred during the marriage,” explains Brana. This encompasses mortgages, auto loans, credit card debt, and more. “It’s common for women to be unaware of the total debt their partner has amassed,” she adds. Women should ensure that debt repayment is part of divorce negotiations, working with a financial planner to comprehensively understand all debts, so they can anticipate post-divorce expenses. Your adviser can help clarify your debt load and suggest ways to manage or eliminate it.

Finding New Housing

Post-divorce, many couples may need to sell their shared home, necessitating a search for new living arrangements. While daunting, relocating can symbolize a fresh start, and a financial advisor can assist in budgeting and cash-flow analysis to ensure your new home is both comfortable and within your means.

Returning to Work

After a divorce, many women receive little to no alimony, which often does not cover living costs. This reality compels most individuals to re-enter the workforce, especially if they’ve been out for years. “It’s vital to keep your skills updated,” advises Chiquita Rice, AAMS, of Monarch Investment Advisors in West Roxbury, MA. “Consider your skill set; for instance, a former teacher might find work as a tutor or substitute.”

Identifying Assets

Don’t presume you’re fully aware of your spouse’s assets. When one partner manages finances, the other may lose track of accounts and balances. “In gray divorces, it’s not uncommon for one spouse to have hidden assets,” says Rice, citing examples like artwork or offshore accounts. Employing a forensic accountant can help uncover these hidden assets.

Health Considerations

Healthcare becomes increasingly important as you age. “The costs can be surprising if you’re used to being covered by your spouse’s employer-sponsored plan,” warns Brana. Therefore, factoring in health insurance premiums is essential when budgeting for a gray divorce.

Social Security Benefits

Women should know that their ex-spouse cannot affect their benefits. However, they might qualify for higher retirement benefits based on their ex-partner’s work record. If married for at least 10 years, you can claim benefits at age 62. “Depending on various factors, remarrying may not be the best financial move,” Brana advises.