Gray divorce can be financially devastating — especially for women

By Jessica Hall

'Marriage is about love. Divorce is about money.'

After 25 years of marriage, Vicki Hickok found herself going through a divorce in 2015 at 55 years old that left her without the means to afford the expensive town in western Washington state where she had lived with her husband.

Although she had previously retired, she returned to the workforce after the divorce at the U.S. Postal Service to make ends meet. She eventually moved to Mexico for the lower cost of living and better lifestyle with just three suitcases and her dog.

"I've never looked back," Hickok said, who is now remarried and lives in Bucerias, Mexico.

Hickok's not alone in divorcing after age 50.

In total, 36% of people who are getting divorced are over the age of 50, according to Susan Brown, professor of sociology and director of the Center for Family and Demographic Research at Bowling Green State University in Ohio.

Another finding in April 2021, from the U.S. Census Bureau said that 34.9% of all Americans who got divorced in the previous calendar year were aged 55 or older. That was more than twice the rate of any other age group surveyed.

So-called "gray divorce" can be financially devastating, especially for women. Older women who experience a divorce see their standard of living decline by 45%. That's much more severe than for men, who see a decline of 21%, said Brown, who is also the co-director of the National Center for Family & Marriage Research.

"For older adults, gray divorce is not something they can recover from quickly. From an economic standpoint, there's less time to recoup the losses," Brown said. "If you're divorcing at 60 or 65, your ability to work much longer is hampered. It's much more difficult to bounce back."

After a later-in-life divorce, 27% of women live below the federal poverty guidelines, compared with 14% of men, Brown said.

"The economic hit for women is much harder than for men," Brown added. "The gender gap in earnings later in life is larger. And women may have lower paying jobs because they chose jobs with more flexibility to allow caretaking for children or parents, or they were out of the workforce and now have to find a job upon divorce."

While assets likely get split 50-50 in a divorce, women historically tend to earn less than men and therefore have less ability to recover.

"Divorce is a financially devastating situation -- 50% of the assets, 50% of the income. It's just math," said CiCi Van Tine, a divorce attorney with Davis Malm & D'Agostine in Boston. "What happens when your runway to recover is less? The advice to 'go get a job' doesn't work for someone who hasn't worked before or has only worked 'mom hours.' It's difficult to get a job for these people."

Social Security alone is not enough to prevent these women from falling into poverty. Women who experienced a gray divorce, on average, can count on less than $14,000 per year from Social Security, Bowling Green researchers found.

Of course, if you were married 10 years or longer, you can claim Social Security benefits from an ex-spouse. More than half of gray divorces occur to couples in first marriages, Brown said, with more than 55% of gray divorces involving a split for couples who had been married more than 20 years.

Read:You can claim spousal Social Security benefits even if you're divorced -- here's how

"The Social Security system was designed until death do you part," Brown said.

The advice to "move on" is only helpful to a point. Only one-quarter of women will remarry or live with a partner after a divorce after age 50, Bowling Green researchers found.

So what should you do if you're facing a gray divorce?

Take a breath and hire advisers

"Financially speaking, don't make any critical decisions for the first year," said Gabrielle Clemens, managing director and wealth adviser at RBC Wealth Management. "The lifestyle change is so much to handle. Don't make any big decisions right away."

"Marriage is about love. Divorce is about money. Hire a divorce attorney and hire a financial adviser. Only then can you agree to a settlement," Clemens said. "For women, they may have less savings and may face longer lives with great healthcare expenses. So, you have expenses going up as income is going down, all at a time when you should be doing asset protection. It's the perfect storm for a financial mess."

"When you're getting a divorce, you're having to make the most critical financial decisions of your life at a really emotional time," said Marc Fitzgerald, a family law attorney with Casner & Edwards in Boston.

Fitzgerald recommends not only hiring an attorney and financial adviser, but also a relationship expert and therapist to help you through the divorce and provide some insight into your future life adjustments.

"When you feel better about yourself, you're more apt to advocate for yourself. Be as strong an advocate for yourself as you can. There's no reason you should be treated any differently than the male side in a divorce," Fitzgerald said.

Make sure you take the time needed to sort through all the assets and future risks.

"The biggest misstep I see is that people are so intent on being done with a divorce that they don't bother fighting for what they really should be asking for. Giving up too soon," said Van Tine. "Years from now, you will need the money. So, pump the brakes on the divorce and take the time to vet all the assets. There's a sweet spot between giving up right away and digging in."

"Don't be emotional in a divorce. Listen to your financial adviser and attorney so you are in the best place possible," Van Tine said.

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Weigh the costs of healthcare, housing and risks of alimony

"One mistake I see is that people think they can have the same lifestyle as before. Just because you need more doesn't mean you will receive that. Getting over that mind-set can be hard," Clemens said.

One concern is that the nonworking spouse may not qualify for a mortgage. They may face renting for the rest of their lives or have to move in with their children, which opens up other relationship issues, Clemens said.

Health insurance, long-term care, and out-of-pocket healthcare costs are all a big concern for gray divorcées, Clemens said.

"There's also the concern of cognitive decline. There has to be a financial plan in place because it can be very difficult and expensive," Clemens said.

Also, alimony ends when the payor reaches 67. So there may be a decade or two left in life to fund without alimony. Also, there's the risk that the payor may not live to 67 or be able to work that long due to health reasons, so that's an added concern that has to be taken into account, Fitzgerald said.

Often who gets to keep the marital home can be an emotional sticking point. It may not be economically feasible for either party to keep the house due to its costs and maintenance needs, Fitzgerald said.

"A divorce can be ending a 25-year partnership. Being too focused on one thing or one asset in the divorce is not seeing the forest for the trees. You need to look globally at the entire picture," Fitzgerald said.

-Jessica Hall

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09-02-23 1020ET

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