Gray Divorce is on the Rise: What this Might Mean for You

June 19, 2020 Author: Tess Downing, MBA, CFP®, Complete View Financial

Complete View Financial

Since 1990, the gray hair divorce rate—a term used to describe a divorce between two individuals above the age of 50—has more than doubled. While gray divorce is still slightly below the national divorce rate, the sudden rise in marriages ending during the golden years of life has already presented a wide array of challenges.

Generally speaking, there are quite a few variables that can cause a divorce to become more complicated. Couples that have been married for longer, couples whose finances are entirely intertwined, and couples with considerable amounts of wealth will all quickly discover that there is no such thing as a “simple” divorce. Because older people have generally had longer marriages and have also had more time to accumulate wealth, gray divorce can often introduce some unique obstacles.

Nobody gets married with the intention of getting divorced, but—for better or for worse—divorce is something that does indeed happen. Below, we will discuss a few of the ways that that you can better navigate a late-in-life divorce.

Use a Mediator, Rather than an Attorney

Mediators are ideal for couples that want to have an amicable divorce and avoid the costs of going to court. Typically, a divorce mediator will cost between $7,000 and $10,000 per case. An in-court attorney, on the other hand, can easily cost $50,000 for agreeable divorces and more than $100,000 for litigated (disagreeable) divorces. A mediator helps reduce total costs and can also help you reduce the amount of stress and time involved in the process.

Remember to do your Homework

When going through a divorce, anything that hasn’t already been resolved will ultimately be resolved by your mediator or the court itself. This can create some unnecessary headaches for all parties involved. Doing things such as organizing detailed financial records, identifying all pre-marital property and assets, and identifying potential sources of financial conflict (mortgage, compensation, children, life insurance, etc.) will make the entire process significantly easier. If you signed a prenuptial agreement (prenup), be sure to understand how this agreement applies to your specific case. Ideally, this homework is something you’ll be able to do your with your spouse, but if you and your spouse are not on speaking terms, these documents are still something you’ll want to gather and review on your own.

Understand the Impact of Retirement

If you are retired or nearing retirement, a divorce can become increasingly complicated. If both couples are retired, then all future cash flows—including pension payments, dividends, ownership benefits, and bonuses—will likely be contested. At this stage in the game, the court will probably not expect either party to go back to work. As a result, alimony payments for gray-haired divorcees can often be rather expensive.

Be Prepared for Additional Complications

There are quite a few financial assets that people generally don’t really think about until they are in the later years of their life. Do you expect to inherent anything from an older parent or relative? How much would your life insurance policy pay out if you were to cash it out today? How will your financial situation change as your wealth moves from your home into other asset categories? What are you expecting to receive from social security and, if relevant, other related programs?

Whether they are in the process of getting divorced or not, many people find themselves not knowing how to answer these questions. Much of your financial planning has been coordinated with your future needs in mind—throwing in a sudden financial surprise, such as divorce, will certainly create new challenges. Nevertheless, there are a few things that cannot be overlooked: being organized, understanding your legal rights, and (trying to) effectively communicating with your spouse will make the entire divorce process much easier. If you do still have any questions, do not be afraid to ask them—even if they are uncomfortable.