These days, one in four divorces in America involves people over 50, and one in 10 divorces involve people 65 and older. As so many older Americans have gotten involved in divorce, the phrase “Gray Divorce” has become common.
Why is the number of Gray Divorces increasing?
There are several reasons. The social stigma of divorce has been largely eliminated, life expectancy has increased, women’s socioeconomic status as improved, people feel that they have more life ahead of them to live, and older people have developed, through the internet and other means, more opportunities to find a new partner.
What important financial issues does “Gray Divorce” create?
Although each instance is different, “Gray Divorce” can frequently have an adverse impact on a woman’s financial viability.
Despite women’s recent strides toward wage equality, the economic disparity between men and women generally widens with age. Even though more than 50% of women between ages 55 and 64 are employed, women still earn less than men, and women live longer than men. Thus, women face a greater financial risk.
Studies show that “Gray Divorces” have a disproportionate effect on women. As many as 27% of women in this situation live below the poverty line, compared with 11% of men. On average, women in a “Gray Divorce” receive less in Social Security than their male counterparts, and less than single women.
What are the key issues involving pensions, IRAs, property, and the like in a “Gray Divorce”?
For older adults, divorce brings the realization that their carefully nurtured nest egg must be divided. This can be painful. These divorces also present financial security issues because divorcing couples have fewer years remaining in their lives to recoup the financial losses occasioned by divorce. Therefore, the division of retirement funds is integral to divorce settlements. Social Security and Medicare options should be thoroughly explored.
Can people maintain their accustomed lifestyle after this big split?
For economically secure, healthy adults, a divorce may have a minimal negative impact. However, it is typically more expensive for two people to live separately than together.
Costs will increase when each person needs to pay for his or her housing and other everyday expenses. The cost burden can become a serious matter, and each spouse may have to face the decision to either return to the workforce, delay retirement, or reduce their standard of living.
Therefore it is important for each party and a great divorce to receive sound advice, early on, from a divorce attorney who understands the distinct issues involved, such as the likelihood of an award of alimony or spousal support and the effects of dividing assets, including retirement assets. This attorney will work closely with the persons financial planner to analyze all options under the law, helping to ensure financial security.