Divorce is becoming less common for younger adults but rates have risen sharply for older Americans. Researchers use the term “Gray Divorce” to describe this trend of late-life separation among couples, typically aged 50 and above. Gray Divorce can be attributed to many complex factors, yet regardless of the reasons, it disproportionately puts women at a higher financial risk.
A study by Susan Brown, PhD and I-Fen Lin, PhD, two Sociology professors at Bowling Green State University, found that “the age composition of those experiencing divorce is shifting to later ages as divorce rates have continued to fall among younger adults while rates have risen for those in the second half of life.” The rate of gray divorce was low and only rose slightly between 1970 (7.8%) and 1990 (8.7%). However, it doubled by 2010, as more than one in four (27%) people getting divorced were aged 50 and older. By 2019, the gray divorce rate rose to 36%—more than one in three people, according to a recent analysis by the duo.
Why is Gray Divorce on the Rise?
There are a myriad of reasons that can shed light on why gray divorce rates have doubled since the 90s. One of the biggest is the evolution of societal attitudes when it comes to divorce. Divorce is no longer a taboo. The stigma is fading, and dissolving one’s marriage at any age in order to pursue happiness and personal fulfillment is certainly in vogue.
Women's increasing financial independence and economic opportunities are additional crucial factors. In heterosexual marriages, women are no longer financially dependent on their spouses and “financial autonomy allows older women to consider divorce as a viable alternative to remaining married,” say Brown and Lin. Beyond that, many couples “confront empty nests, retirement, or declining health, which can pose considerable challenges for marital adjustment” and these turning points can serve as a catalyst to “reassess their marriages, ultimately leading them to divorce.” Susan Myres, attorney and Managing Partner of Myres & Associates explains some older couples have “simply drifted too far apart from their spouses, while some have suffered abuse or discovered shocking transgressions.” Whatever the rationale, all of her clients, including ones in their 80s - “feel like any years of life they have left are too precious to spend with the wrong person” and this is at the core of the gray divorce revolution.
What are the Financial Consequences of Gray Divorce?
Brown and Lin also studied the economic consequences of gray divorce for both men and women and concluded that while gray divorce has “harsh financial ramifications” for both parties, it is “often financially devastating” for women. This is concerning given that more than 600,000 people aged 50 and older got divorced in 2010 and estimates indicate this number will rise to over 800,000 by 2030. Their findings show that the standard of living for women declined by an alarming 45% following a gray divorce. In contrast, the drop for men was “less severe but still sizable” at 21%. Furthermore, these declines persisted over time for men and only reversed for women when they re-partnered or remarried.
According to a new analysis by the Council of Economic Advisers (CEA), an agency within the Executive Office of the President tasked with providing empirical research for the White House, even though re-marriage offsets some of the losses associated with divorce, older women are less likely to remarry than older men. Only about 20% of older women remarried or re-partnered, as opposed to 37% of men. Thus, women are more likely to face the negative consequences of divorce for longer. This compounded with the fact that women live longer than men, “have lower median lifetime earnings than men,” have less in retirement savings (even lower for women of color), and qualify for lower Social Security benefits compared to their male counterparts makes it more likely for them to live in poverty at older ages. This is especially true for women aged 65 and older as they are 25% “more likely to live in families with incomes below the poverty line than older men” (Figure 1), which leads to higher rates of participation in safety net programs such as housing assistance, SNAP, Medicaid, etc. (Figure 2).
Women’s longer lifespan typically means higher healthcare costs as well. The CEA points out older women are more likely than older men to have reported taking less medication than was prescribed due to the cost. In fact, at ages 65 to 69, about 10% of women reported taking less medication than prescribed due to cost compared to 6% of men (Figure 3). These numbers are even higher for Black and Hispanic women. At ages 65 to 69, 14% of Black women and 13% of Hispanic women reported skipping medication in comparison to 9% of white women.
How Can You Protect Yourself Financially During a Gray Divorce?
Divorce is a life-altering event at any age, but going through a divorce after decades of marriage can present distinct financial challenges. Gray divorces typically do not involve legally enforceable child custody or child support, as children, if any, are grown and independent. The lion’s share of issues arises from dividing up the marital estate (residences, vehicles, and so on) and how assets and debts are divided in a divorce differs by state. According to Evan Beach, a certified financial planner, the majority of “states are referred to as equitable distribution states, meaning that there must be a fair distribution of marital property in the divorce process.” He notes that “fair and equitable,” however, does not mean “even.” The equitable distribution laws account for a break in the earnings of a spouse and this is key for women, as they are more likely “to drop out of the workforce in their prime earning years to care for children, putting them at a disadvantage in the divorce proceedings and after the split is finalized,” as noted by Alicia Adamczyk of Forbes. Oftentimes, they must try to return to the workforce after years or even decades to support themselves even if they receive alimony or spousal support.
Moreover, Adamczyk writes, the process of divvying up retirement accounts such as 401(k)s, IRA, pension, etc. “can be a messy and expensive financial hit.” This is partially because “the way the 401(k)s and pension plans are split is governed by a qualified domestic relations order (QDRO), while IRAs are distributed depending on if they were opened before the marriage or during.” A QDRO is a legal tool that allows assets in a 401(k) or pension plan to be divided without tax consequences or penalties. Social Security also comes into play, as the spouse with a lower-paying job or the homemaker spouse “may see their Social Security benefits slashed, depending on how long they were married.” Since women live longer than men on average, they must also plan for longer health insurance coverage and associated costs because as soon as the divorce is final, the dependent spouse will lose health insurance coverage as they are no longer considered a family member.
This is just the tip of the iceberg when it comes to understanding the intricacies of divorce after decades-long marriage and with retirement looming around the corner. In order to put yourself in the best position possible, here are a few ways to get started:
Build A Support Team: It is recommended that both parties build a team of licensed professionals consisting of divorce lawyers, financial advisors, accountants, etc. as they navigate through untangling decades of merged finances, which may include things like an “estate plan, any college savings plan for grandchildren or any other long-term funds or plans,” writes Rachel Cautero of SmartAsset. Enlisting the help of experts will also allow for a step-by-step look at how the divorce process works and provide useful experience in building the right financial exit strategy. Aside from putting together a team of experts, it is important to add a few trusted friends or family members to the team so that they can provide emotional support in this tough time and even assist in the transition as much as they are able to.
Take Charge of Your Finances: Start by taking an active role in the household finances. Kamila Elliott, a certified financial planner and co-founder of Collective Wealth Partners, posits women should not get to a point where they are “unaware of their household’s spending, savings, and mortgage payments and interest rates.” This will put them at a significant disadvantage and may even blindside them during divorce. It is imperative women understand the ins and outs of financial management because this valuable knowledge will prepare them for handling their own finances post-divorce.
Learn New Skills: Whether or not older adults have to reenter the labor force after the divorce settlement, learning new skills in our rapidly changing technological landscape will help them become adaptable and resilient. Staying current will not only allow them to better interact with the increasing digital additions to our everyday lives but also lead to finding a community of like-minded adults. Older Adults Technology Services (OATS) from AARP and their flagship program, Senior Planet are just two examples of this. Their programs include both in-person and virtual lectures, workshops, courses, special events, and so on that equip seniors with the “tools and training necessary to take advantage of today’s technology and use it to enrich their lives.” These skills will come in handy if they ever decide to go back to work after a divorce or even retirement.
Divorce in the second half of life can further complicate the long-term financial futures of older adults, especially women. Nevertheless, their commitment to living a life that brings them joy, no matter the cost, is truly remarkable. It highlights the fact that it is possible for anyone to rebuild their life the way they want and not settle. Taking initiative, being proactive, and preparing ahead can make doing so much easier.
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