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Breaking up in old age can be costly, especially for women.
According to one study, the rate of “grey divorce” – a term describing divorce among those aged 50 and older – doubled from 1990 to 2019. Study in 2022 Published in the Journal of Gerontology. For adults over 65, that number triples.
In 1970, about 8 percent of divorced Americans were 50 and older. By 2019, that proportion had jumped to a “stunning” 36%, the study found.
About one in 10 people (9%) who were divorced in 2019 were at least 65 years old.
Meanwhile, Susan Brown and Effen Lin, professors of sociology at Bowling Green State University and authors of the analysis, said divorce rates among young people have declined.
The ‘long-term financial stress’ of gray divorce
Kamila Elliott, a certified financial planner in Atlanta and co-founder of Collective Wealth Partners, says that in heterosexual relationships, gray divorce often “negatively affects women more than men.”
study suggestion Within a year of divorce, women’s household income typically drops by 23% to 40%.
Laura Tah and Alicia Eads, sociology professors at Cornell University and the University of Toronto, respectively, said the financial impact on men is “less severe” and some studies suggest their incomes may even increase after a breakup.The two have co-created many works document on this topic.
Experts say these economic gaps appear to be smaller for younger generations of women because they are more likely to work than older women. Many divorced seniors today still cling to the traditional idea that men are the sole breadwinners of their families, they say.
“The divorced women we’re seeing today are part of a generation that has spent their entire lives without a job,” said Natalie Colley, a CFP in New York and senior principal counsel at Francis Financial.
Women also tend to earn less than men due to a persistent wage gap; they tend to have less savings, and divorcees approaching retirement don’t have much time to make up the difference. Divorced women can apply for Social Security benefits based on their own earnings or their ex-spouse’s earnings history, but the latter option is often worth up to half the value of her ex’s benefits.
Remarriage or cohabitation often helps strengthen financial status by pooling resources. But women who experience a gray divorce are less likely than men to do so: according to one study, only 22% of women returned to their partner within a decade after a gray divorce, compared with 37% of men, making them “Persistent economic disadvantage in old age.”separation Paper By Brown and Lin.
Overall, Brown and Lin wrote, women’s living standards fell by 45 percent after gray divorce, while men’s decline was smaller, at 21 percent.
The persistence of these negative economic outcomes over time “suggests that gray divorce is a long-term economic strain,” they said.
Brown and Lin found that among women who were eligible for Social Security pensions, women who divorced after age 50 were nearly twice as poor as women who were divorced before age 50; but this was not true for men.
How women can protect themselves financially
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Here are some steps women can take to guard against the financial pitfalls of a future divorce, financial advisors say.
Actively manage family finances. “Women should take a very active role in household finances,” CNBC member Elliott said. consultant Committee.
For example, she said, women should not be kept in the dark about household expenses, savings, mortgage payments and interest rates. This information may come as a surprise when it comes to divorce, and women may find that they are not well protected financially.
Additionally, Coley says not being involved in financial decisions may mean they’re less equipped to handle their own finances if they were single.
“I can’t tell you how many times the woman has no idea what her husband’s financial situation is,” Elliott said.
You can use your own money. Many couples mix their financial accounts. Elliott said many women may also be authorized users of credit cards rather than the primary owners.
But Elliott said women should make sure they have access to their own funds so their spouses don’t turn off the financial spigot if the relationship sours.
Additionally, she added, women should consider investing or saving in their own retirement accounts.
Retirement savers typically need to earn income to open and fund an IRA; however, women who are not working can open “Spousal IRA“Based on their spouse’s income. (You must be married and file a joint tax return to open.)
Be strategic when applying for Social Security. Social Security is an important source of income security in retirement, especially for women.
Corley said the order in which benefits are collected is important for married couples and can help women avoid divorce (or widowhood) later on.
For example, suppose a husband qualifies for more Social Security benefits relative to his female spouse. He can delay receiving benefits until age 70, maximizing his lifetime monthly benefits.
Kohli said this increases the monthly benefit his wife can receive in the event of divorce or widowhood and helps maximize a woman’s cash flow in such situations.
Save some money on alimony. Elliott said if a woman receives alimony after a divorce, she should try to save some of it rather than spend it all. That’s because alimony usually only lasts for a certain period of time, she said, and women have to stick with it.
I can’t tell you how many times the woman has no idea about her husband’s financial situation.
Camilla Elliott
Certified Financial Planner and Co-Founder of Collective Wealth Partners
Relative to payout levels, “just because you get alimony, it’s not business as usual,” she said. “You may need to reevaluate your lifestyle.”
Consider entering into a prenuptial or postnuptial agreement. Couples can also consider prenuptial agreement or postnuptial agreement For example, Corley said, the bill includes provisions that provide financial protection when women leave the workforce to care for children.
She added that doing so often permanently reduces a caregiver’s ability to earn money, and legal agreements can help protect against this financial risk. For example, Kohli said, perhaps it provides that if a marriage is dissolved, a woman will have a guaranteed source of income for a certain period of time. She recommends working with an attorney who specializes in handling such legal documents.
