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Divorce

Can the Gray Divorce Be a Perfect Financial Storm?

How to prepare and protect your financial well-being during and after divorce.

Key points

  • Couples 50 years and older can face big financial surprises.
  • Effective communication between spouses is crucial during a gray divorce.
  • Accepting the new financial reality, forward thinking, and planning are essential.

Gray divorce refers to couples aged 50 and older. Divorces include legal, emotional, and financial issues. To provide information about important financial topics to gray divorce couples and their adult children, I recently spoke to Lili Vasileff, a certified divorce financial analyst, mediator, and litigation divorce financial expert, practitioner, writer, and author of books on divorce, including Money & Divorce: The Essential Roadmap to Mastering Financial Decisions published by the American Bar Association.

CH: Why are we hearing more about gray divorce?

LV: Among adults aged 50 and older, the divorce rate has doubled since 1990, and for those 65 and older, it has tripled. The increase in breakup rates is mainly first marriages, and more than 55 percent occur with couples married for more than 20 years. Researchers predict that by 2030 the divorce rate for the gray divorce population will triple.

CH: From your perspective, why is gray divorce considered a perfect financial storm?

Pavel Danilyuk/Pexels
Pavel Danilyuk/Pexels

LV: Divorce is not only about the law and finances. Emotions overlay the entire landscape of divorce. And, generally, the older you are, the more financially complicated divorce is. Depending on your age bracket, adults over 50 face a lot of challenges, which may include:

  • Demanding jobs or having been out of the workforce for a long time
  • Reduced economic cushions
  • College tuition bills for their adult children
  • Adult boomerang children
  • Blended families
  • Longer life expectancies
  • Skyrocketing health costs
  • Inexperience with finances
  • Responsibility for taking care of elder parents

Additional circumstances that can add to this storm are:

  • Stay-at-home spouses are typically financially dependent; they risk being impoverished or outliving their assets.
  • Couples 50 years and older may have substantial debt, experience significant market volatility, and suffer shrinking equity, complicating financial security.
  • Some may need to take reduced social security benefits for a cash flow that meets living expenses.
  • They have a longer life expectancy.
  • Their long-term marriage proved unsustainable, which can be devastating to the couple and confusing to adult children, friends, and family.
  • Adult children may depend financially on their parents, which stretches resources.

It is imperative to seize the opportunity to address essential concerns and potential contingencies with forward thinking during the divorce process.

CH: What is the number one fear of divorcing couples 50 and older?

LV: Not having the sufficient cash flow to meet living expenses. For older women of divorce, money ranks as the number one concern, even topping their concerns for their children. For men, money is often as significant a stressor as their feelings of isolation and loneliness.

CH: How do gray divorce couples experience big financial surprises?

LV: Sadly, in most marriages, the lack of communication about money can create many financial surprises during a divorce.

In 2019, CNBC reported that 16 percent of respondents said they regard their spouse as a financial role model, 27 percent rarely discuss personal finances with family members, and fewer than half (45 percent) make financial decisions in partnership with another household member.

Almost 50 percent disagree on when to retire or what their lifestyle will be during retirement. Adding divorce to this mix makes for an explosive financial reality.

CH: What topics can comprise this explosive awakening?

LV: Gray divorce couples who have never dealt as a couple with finances are now required to make financial decisions that impact them for the rest of their lives with only half of their marital estate and finite income. They may face:

  • History of poor or no communication about financial circumstances
  • Being on the cusp of retirement
  • Mismatched expectations for when to retire and what they want for their retirement lifestyle that their divorce may have crushed.
  • Limited potential for greater earning capacity
  • A shorter time frame to replenish assets divided in the divorce
  • Lack of understanding about spousal support guidelines
  • Insufficient knowledge of savings and retirement planning
  • Concern over health issues
  • The potential disparity in values concerning responsibility for adult children and elderly parents

CH: Wow. I was an A student in math, but as a non-financial professional, I am overwhelmed by what you have shared so far. You have listed so many problems. What are the essential concerns and potential contingencies?

LV: Almost one-third of all households age 55 plus have neither retirement nor savings accounts. For older women, the loss of accumulated wealth and income is harshest if they have been out of the workforce for a significant period.

Financial security, health care, and cash flow are the key goals to address in gray divorce, and they take preparation, planning, and execution.

CH: What concerns have you seen among adult children of gray divorce couples?

LV: Often, adult children have concerns about the post-divorce lifestyles of one, if not both, parents. Some of their worries are:

  • Does each parent have experience, knowledge, and capability to manage their finances post-divorce?
  • Will each parent be financially independent?
  • Will they be vulnerable to scams, costly mistakes, predators, or other family members?
  • Are they depressed or fearful?
  • Are they jumping into new relationships too soon?

In my upcoming posts in this series, Lili and I will discuss actions gray divorcing couples can take.

To find a therapist, please visit the Psychology Today Therapy Directory.

Copyright 2023 Carol R. Hughes, Ph.D.

References

Susan L. Brown and I-Fen Lin, “The Gray Divorce Revolution: Rising Divorce Among Middle-Aged and Older Adults, 1990-2010,” Journals of Gerontology Series B: Psychological Sciences and Social Sciences 67, no. 6 (2012): 731–41, doi:10.1093/geronb/gbs089.

I-Fen Lin and Susan L. Brown, “The Economic Consequences of Gray Divorce for Women and Men.” Journals of Gerontology: Social Sciences, 76, no. 10 (2021):2073-2085. doi: 10.1093/geronb/gbaa157. PMCID: PMC8599059

Lili Vasileff, Money & Divorce: The Essential Roadmap to Mastering Financial Decisions, (Chicago: American Bar Association Publishers, 2018.

Pew Research Center, "2015 Consumer Survey Analysis of the '2015 American Community Survey.' "

"Fidelity Study, 2013."

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