‘Doubling Rates of Gray Divorce: A Financially Challenging Decision, Especially for Women’
The divorce rate has witnessed a twofold increase since 1990 for Americans aged over 55, and for couples over 65, the rate has tripled. Despite the decline in the divorce rate for younger Americans, gray divorce, or divorces among older couples, has surged in recent decades, according to federal data.
“One in 10 people getting divorced today is 65 or older. That is remarkable,” stated Susan Brown, a distinguished professor of sociology at Bowling Green State University in Ohio. This trend indicates a growing number of aging adults who may face the prospect of aging alone.
Gray divorce has profound financial implications, often leaving few “gray divorcees” in a better financial position. Federal data reveals that divorce is becoming more prevalent among older Americans even as the divorce rate for younger generations is on the decline.
Financial Costs of Gray Divorce:
In financial terms, divorce is a costly endeavor for anyone, but for older Americans, the costs are steeper. Research by Susan Brown and her colleagues indicates that after a gray divorce, a man can expect his standard of living to decline by 21%, while a woman’s standard of living may plummet by 45%. Both partners typically see their wealth decline by half.
Financial Challenges and Tips for Older Americans:
- Rebuilding Your Shattered Retirement Plan:
- Problem: Gray divorce can deplete retirement accounts, leaving little time for rebuilding.
- Solution: Create a new plan, save aggressively, and divert a larger share of income into a diminished 401(k). Focus on maximizing retirement savings to recover from the financial impact of divorce.
- Returning to Work After a Long Hiatus:
- Problem: Earning money after a divorce, especially after a long hiatus from work.
- Solution: Assess whether it’s feasible to live comfortably without returning to work. Consider budget adjustments to accommodate a tighter financial situation if returning to work isn’t a viable option.
- Divvying Up the Family Home:
- Problem: Deciding what to do with the marital home.
- Solution: Evaluate the costs of owning and maintaining the home before deciding who gets it. Consider downsizing if the financial implications of keeping the marital home are unfavorable.
Additional Financial Complications:
Gray divorce introduces various financial complications, including considerations related to Social Security benefits, health insurance, estate plans, and credit card debts. The decision to divorce later in life requires careful consideration of these factors.
Conclusion:
Gray divorce, while becoming more prevalent, poses significant financial challenges, especially for women. The decision to divorce later in life requires careful financial planning, including rebuilding retirement plans, evaluating the feasibility of returning to work, and making informed decisions about marital assets like the family home. The costs associated with gray divorce highlight the need for individuals to assess the financial implications before proceeding with such a significant life decision.