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The impact of grey divorce on retirement

On Behalf of | Dec 3, 2020 | Divorce |

Although the divorce rate in the United Stated has decreased overall in recent years, it is going up among older couples. While there are many reasons for this trend, divorcing older couples may want to consider the potential impact on their financial reserves, as their combined assets may be halved just at the moment when they are transitioning into retirement.

A recent L.A. Times article on grey divorce points to many health issues that are associated with the stress of separation. Older adults who separate or divorce, for example, have a higher resting blood pressure and tend to experience significant weight gain. They also tend to have higher levels of depression after a divorce than those who have lost a spouse.

The financial cost of divorce

Divorce after the age of 50 presents huge financial challenges, many of them negative. A couple that has pooled assets, including home equity, IRAs, stocks and life insurance policies, can expect that their individual assets will drop by half after the divorce is final.

In Riverside, the couple’s assets and debts will be split 50/50, even if one spouse accumulated more than the other. Property division will include the home, business, retirement accounts, pensions and bank accounts. Although the couple can work around California community property laws, when the divorce is not amicable, the law will prevail.

The standard of living of older divorcees drops, although for women it is more severe. While older men see a drop of 21%, women’s standard of living plunges by 45% after divorce. Late in their careers, older people are also less likely to get back into the work force to recover financially. Divorced women 63 and older have a poverty rate that is 27% higher than any other group in that age bracket.

Health insurance and Social Security

For people who either have not worked during the marriage or who have always been on their spouse’s health insurance, the implications of divorce are serious. When the divorce is final, he or she will no longer be on the other person’s policy.

Medicare and Social Security are available to those who have either worked at least 10 years or who are eligible based on the former spouse’s record, with conditions. But is important to examine the financial cost of divorce through the lense of health care and maintenance expenses.

With divorce comes not only emotional upheaval, but potential financial insecurity. Before making the plunge, it is important to examine the pros and cons of divorce with experienced family law attorneys.


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