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  • Bridget Grimes, CFP®

The Rise of the Gray Divorce and What it Means to Women

Updated: Sep 19, 2023

There is a new trend in the divorce statistics as a result of our longevity. There's even a label for it, it's called the "Gray Divorce." Divorces among couples over age 50 are happening at twice the rate they did just a generation ago. And it’s causing substantial financial risks for women.

The average American woman is now living to age 82, which means they are living long into retirement. When couples divorce after age 50 women in particular face a substantial risk they will outlive their money. Why? While men often achieve or exceed their marital standard of living after divorce, women typically do not. In fact, the average divorced woman’s income falls by more than a fifth. It’s essential for women to get financial guidance when divorce and plan carefully for their years to come.

What are some of the issues unique to Gray Divorces?

Guidance: 70% of the time in divorce, wives leave their financial advisor, largely because many believe their advisors loyalty lies with their ex-spouse. Having an advisor in this space is critical to preserve financial security, so find a planner you trust who listens to your concerns and understands the guidance you need.

Retirement spending: While you might expect expenses to drop when there is only one person now, instead of two, often the opposite it true. Increased travel, dining out, and spending in other ways as a result of new found independence often happens. We also know that healthcare costs for women are greater than men later in life, so you’ll want to make sure you have plan in place for these added costs.

Spousal Support: For those who are dependent on court-ordered spousal support many discover, it may not be a secure source of retirement income. Factors that will affect a women's spousal support include: the length of the marriage, the fact that he is likely to die first and you may not have insured his life, and he may elect to, or need to retire for health reasons early. These factors mean your future if solely or primarily dependent on his income is very uncertain. You will need help with your budget.

Retirement income: splitting assets in divorce often means splitting retirement funds, which means splitting income. Having a plan around your reduced income can make the difference between being financially secure or not. Many women over 50 took time out of the workforce to raise children and often have at best half of thier spouse's social security to rely on as guaranteed income.

Taxes: Rather than filing taxes with the more favorable Married Filing Joint status, divorce means your tax status changes to Single. This means a likely increase in taxes due, and can be a hit to income, especially if most retirement income is coming from tax deferred accounts.

Details: Its critical to make sure assets are actually split based on what the divorce order mandates. Even though spouses are awarded half of retirement they may not take the required steps by getting a QDRO in place in a timely manner or otherwise get the funds into their name which leaves their funds at risk.

Financial security: Any financial plan you had while married will need to be revised for your long term financial security. Your personal goals and wishes will need to be revisited with your revised income in mind. Any gaps in reaching those goals will need to be addressed with new solutions. A planner can run projections on where you are now, before the split, and where are looking to be after the split. This allows you come up with a budget that will work with the income you have and make sure you don’t run out of money.

Divorce over 50 comes with its own unique concerns, especially for women. Make sure you have guidance to help you navigate this transition so you maintain your financial security. If you’d like to learn more about how we help women navigate the financial implications of Gray Divorce, please reach out to us at WealthChoice.

Bio: Bridget Grimes, CFP® is the President of WealthChoice, a boutique financial life planning firm for women executives, and Co-Founder of Equita Financial Network, a collaboration of women-led financial planning firms. She is also author of the Best Seller Corner Office Choices: The Executive Woman’s Guide to Financial Freedom. She believes in empowering women through education, collaboration, and support so that they have the confidence to take action for a better life.

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