The Financial Challenges of “Gray Divorce”

While divorce rates have generally declined in recent years, one trend stands out in sharp contrast. “Gray divorce”—the separation of couples aged 50 and older—has surged dramatically.

Rosie Shrout, a professor at Purdue University, notes that individuals are increasingly unwilling to remain in unhappy marriages for extended periods and feel more hopeful about the possibility of finding a new partner.

This growing demographic faces unique financial challenges that younger couples simply don’t encounter. At Holistic Financial Partners, we specialize in guiding clients through these complex transitions with clarity and confidence.

Understanding the Gray Divorce Phenomenon

The statistics tell a compelling story. According to Verywell Mind, “Gray divorce was relatively uncommon in 1970 and grew only modestly until 1990. In 1990, 8.7% of marriages among people over age 50 ended in divorce. By 2019, that number had grown to 36%.”

Meanwhile, the divorce rate among individuals ages 65 and older reached 15% in 2022, nearly three times the rate in the 1990s for the same age group.

What’s driving this trend? Several factors contribute:

Increased longevity: With longer lifespans, the prospect of spending decades in an unfulfilling marriage feels less acceptable
Financial independence: Particularly for women, greater financial autonomy has created more options
Empty nest syndrome: Many couples discover they’ve grown apart once children leave home
Shifting societal norms: Reduced stigma surrounding divorce has made separation more socially acceptable

Divorcing after 50 creates financial complications rarely experienced by younger couples:

Retirement Account Division

When you’ve spent decades building retirement savings together, dividing these assets becomes complex. Qualified Domestic Relations Orders (QDROs) are typically necessary to split 401(k)s and pension plans, while IRAs require careful handling to avoid unintended tax consequences.

Many divorcing spouses don’t realize they may be entitled to Social Security benefits based on their ex-spouse’s work record if:

The marriage lasted at least 10 years
You remain unmarried
You’re at least 62 years old

This can be particularly valuable for spouses who left the workforce to raise children or support their partner’s career.

Healthcare Planning

Medicare doesn’t kick in until age 65, creating potential coverage gaps for those divorcing in their 50s or early 60s. Options might include:

COBRA coverage (typically limited to 36 months)
Health insurance marketplace plans
Coverage through new employment
Negotiating continued coverage through a spouse’s plan as part of the settlement

Housing Decisions

The family home often represents both significant financial equity and emotional attachment. Should you:

Keep the house (and its maintenance costs and potential tax implications)
Sell and divide proceeds
Consider a buyout arrangemen

These decisions must be weighed against retirement needs and lifestyle considerations.

Reduced Recovery Time

Perhaps most critically, gray divorcees have significantly less time to recover financially. Research suggests that both men and women experience financial setbacks, but there is a notable gender disparity. Older divorced women, in particular, are at higher risk, with studies showing they endure a 45% decline in their standard of living, whereas men face a 21% decrease.

How a CDFA^® Professional Makes a Difference

When facing the financial complexity of gray divorce, working with a Certified Divorce Financial Analyst® (CDFA®) provides crucial advantages. At Holistic Financial Partners, all our advisors hold specialized certifications in divorce financial analysis. We work alongside legal teams to:

Analyze long-term impacts: We project how different settlement options affect your financial security 10, 20, or 30+ years into the future
Identify tax consequences: From retirement account distributions to property sales, we help you understand and minimize tax implications
Optimize asset division: Not all assets are created equal; we help you understand which are most beneficial for your specific situation
Create sustainable budgets: We help establish realistic spending plans for your post-divorce life
Develop investment strategies: Your investment approach likely needs adjustment to meet your new financial reality

Moving Forward: Financial Planning After Gray Divorce

Divorce represents not just an ending but also a beginning. As you establish your new financial independence, we help you:

Reassess retirement planning based on your new financial reality
Update estate plans and beneficiary designations
Create tax-efficient investment strategies aligned with your goals
Establish a sustainable spending plan
Protect against healthcare and long-term care costs

As one of our clients shared, “The guidance I received was invaluable during my divorce. They helped me understand my financial options and secure a settlement that has allowed me to rebuild with confidence.”

Take the First Step

You don’t need to face these complex financial decisions alone. At Holistic Financial Partners, we provide the specialized and compassionate guidance you need to secure your financial future.

Holistic Financial Partners specializes in helping individuals make informed, strategic financial choices during life’s most challenging transitions. Our Indianapolis-based team has guided hundreds of clients through divorce, business sales, career changes, retirement, and inheritance planning. Contact us at 317-550-3400 to learn more.