3 Strategies to Protect Yourself During Gray Divorce

5 minute read

Here’s the good news about divorce. Since 1990, the total number of marital splits per year has been trending down, according to the CDC. Here’s the bad news. Gray divorce, which is defined as divorce between people aged 50 and over, has more than doubled, according to research from Bowling Green State University. Right now, people over 50 account for more than a quarter of all divorces – and those over age 65 account for one in 10.

There are many ways gray divorce differs from divorce among younger people. The drivers are different, for one thing. After long marriages, it’s easier to expect that some couples may have really “grown apart.” Couples who have been unhappy for significant periods of time also find it easier to part after the children have left the house, in some cases, or because the stigma of divorce has faded in others.

Longer life expectancies play a significant role as well, experts say. When you think that you could live into your 80s, 90s or beyond, the desire to find a happier path for those remaining decades is greater. “Clearly 70 is the new 50,” says Rhonda Noordyk, a Certified Divorce Financial Analyst and founder of the Milwaukee-based Women’s Financial Wellness Center, a business focused on helping women considering or in the process of divorce.

Importantly, Noordyk notes, the biggest difference between divorce at a younger age and gray divorce is financial. On average, divorce results in a decline in the standard of living for both people going through it. But because gray divorce often hits close to or after the time a couple’s earning years are over, it may be worse. The standard of living for older men going through divorce drops by 21% – and 14% live below the federal poverty line. For older women, the picture is even more dire. Their standard of living falls by 45%, and 27% live below the federal poverty line.

Avoiding that scenario is precisely why Noordyk launched her business after a long career in the more traditional side of the financial industry. She and her colleagues would hold events focused on improving the financial wellness of women, and again and again she’d hear versions of the same story. “[Women would say], ‘I’m going through a divorce, and I don’t feel like people are helping me. I don’t know what questions to be asking. I feel like I’m getting bullied a little bit. What are my options?’”

WATCH Your Money Map: Protecting yourself from gray divorce

What you need, Noordyk explained, is a game plan. Noordyk recently joined Alliance Education Fellow and HerMoney CEO Jean Chatzky for Your Money Map to break down what we need to know about our finances before, during, and after divorce. Here are three areas where she suggests anyone contemplating divorce, particularly at a later age, should turn their focus.

• Get real about the numbers. When you go through a divorce, you’ll be asked to compile a financial inventory – what’s coming in, what’s going out and where it’s going, as well as a net worth statement that looks at the existing assets and where they are held. The first part is essentially an honest look at the household budget. Noordyk says it’s best to do that, not just when your lawyer asks for it, but in the earliest stages of even thinking about divorce. Why? It’s really the only way to see what you’ll likely have to live on if and when you do separate. Fear of divorce also leads many women Noordyk sees to “catastrophize” about a situation that might not be as bad as they believe. “I was working with a woman who said, ‘Rhonda, my credit’s terrible,’” she says. Noordyk asked what she meant by that, and the woman guessed that her credit score was in the mid-400s (which is indeed terrible – it’s very rare for anyone to have a score below 500.) But then Noordyk discovered that the woman hadn’t actually taken the step of pulling a credit score – when she did, she found her real score was several hundred points higher.  “The situation may be challenging,” Noordyk says, “[but often] it isn’t as challenging as the woman thinks it’s going to be.”
• Consider insurance. During our working years, we often don’t focus on the fact that a solid benefits package can add 20% or even 30% to the actual value of what we earn in salary each year. If you get your insurance – particularly health insurance, but also life insurance or disability insurance – from a spouse’s employer, thinking about how you’ll replace those benefits and what it will cost to do so is key. If you have a plan available through your own employer, switching to it will generally be the most cost-effective move – and you won’t have to wait for open enrollment. A change in marital status will generally enable you to join. You’ll also likely have the ability to stay on your spouse’s plan for 18 months under COBRA (the Consolidated Omnibus Budget Reconciliation Act), but it’s often pricier than buying your own plan through HealthCare.gov. Run some numbers to get a benchmark.
• Revisit your retirement plans. If you haven’t met with a financial advisor to talk about how you’re situated for retirement, this would be an excellent time to do that. Even if you have, a change in your life of this significance is reason enough to set another meeting. Talk through not just what you’re thinking about and when (a divorce may push your timetable down the road a bit), but how to split up the marital assets so you can set yourself up for the best shot at a comfortable life, and whether or not you want to figure out a way to source some protected income to cover your fixed costs going forward.  “One of the things that frustrates me is when women will say, ‘I’m just going to give him the pension, and I’ll take the house,’” Noordyk says. It’s important to consider that the pension is a liquid and growing asset, while the house, in many cases, is a liability that neither partner can afford to carry on their own.

Bottom line, Noordyk says, information is power – and this is one of the most important periods in your life to have a solid grasp on it. The process will take some time, but it’s time well spent.

For more information on navigating your finances as you age, protecting your income, and making that income last a lifetime, visit the Tools and Guide section of The Alliance website.