The perils and perks of gray divorce

The rise in divorce for couples aged 50 and over is a global phenomenon, outpacing divorce among all other age groups. According to the Pew Research Center, although divorce has been going down in recent years in the United States, for Baby Boomers it has roughly doubled in the past 25 years.

Although there are a number of factors that contribute to this trend, one of the top reasons people in North Carolina and elsewhere are having a change of heart about remaining with their partner may have to do with rising life expectancy. Putting up with their spouse into their 80’s may seem daunting, so many are seeking a future that looks more positive or fulfilling. Other reasons have to do with:

• Less of a stigma to divorce, as women who are earning more seek greater financial independence from their spouses.
• More wives having separate employer benefits, making divorce more attainable.
• Empty-nest syndrome once the children leave the home, causing a reassessment of future goals and what people may want out of life.

Before making the decision to part ways, it may be wise to examine the financial implications of a late-life divorce, especially for couples whose financial holdings may be considerable after a lifetime of saving. Divorce is expensive no matter when it happens, but there are unique considerations for gray couples.

Factors to consider

Careful planning is in order once one or both spouses has made the decision to divorce. Chief among these concerns will be income sources. An employee’s skills may not be as marketable when they are middle-aged, and their employer may transition them out just when they have a greater need of income. On the other hand, middle age for men is often the stage where they are at their peak earning power, as they often begin working at an earlier age and continue to see salary increases into their 50’s.

As both spouses will have to understand available income and investment sources, it will be important to consider:

• Retirement sources, as IRAs, annuities and other investment accounts may be split during the divorce
• Health insurance and long-term care options, which will be a major concern for a spouse who is on the other’s policy, especially if the divorce happens before Medicare kicks in or if they are not eligible for Medicaid. A discussion of options that provide for both spouses will be critical.
• Taking care of the family and children, even if they are adults. For minor children, custody and support will factor into discussions, and if the kids are in college, paying for tuition and other expenses will also have financial repercussions. If the income gap between the spouses is significant, negotiating alimony may be a priority.

A clear-eyed look at the future

Looking at a future where you are no longer married may seem rosy and full of potential, but it is prudent to first make sure that that you lay a solid financial foundation before jumping off the cliff. Whether the divorce is amicable or not, the shared goal will ideally be to ensure the financial and emotional security of both sides.