What Are the Financial Effects of a “Gray Divorce”?

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After 30 years of marriage, Jane Doe is sitting in my office after she had been served with divorce papers. Jane finds herself going through a divorce in 2022 at 58 years old. She has many questions about her future post-divorce including whether she will have the means to afford the home and lifestyle in St. Louis County where she lives with her husband. 

Although Jane had previously retired, she now wonders whether she will need to return to the workforce post-divorce. If she does return to work, Jane questions what income she can earn and whether the court will award her spousal support to help her pay monthly expenses as a single individual. Jane questions whether she will need to sell her home and move to a different part of St. Louis to find a lower cost of living and better lifestyle with just one income to pay the bills. 

Jane is not alone in divorcing after the age of 50. Approximately 36% of spouses who are getting divorced are over the age of 50. A finding in April 2021, from the U.S. Census Bureau, said that 34.9% of all Americans who got divorced in 2020 were age 55 or older.

Divorce for couples over the age of 50 is commonly called a “gray divorce”. Due to the ages of the spouses, a gray divorce can be financially devastating if not handled properly. The risk of financial problems is heightened for a spouse who has been out of the workforce for a significant time. If that spouse is not old enough to qualify for Medicare and is unable to secure full-time employment with benefits, the monthly expense of health insurance can greatly affect that spouse’s standard of living. The concern for both spouses in a gray divorce is the time it may take to recover from the financial effects of the divorce. From an economic standpoint, there’s less time to recoup the losses in earnings, savings, retirement, and other property acquired during the marriage. If you divorce after age 60, your ability to work longer to recoup those financial losses could be hampered and you need to make sure that you discuss these concerns with your attorney before entering settlement negotiations or testifying at a deposition or trial. 

Your divorce over 50 attorney should also discuss your work history in detail to determine if the economic hit for you will be much harder than for your spouse. A full knowledge of your work history and potential earnings post-divorce is needed to determine spousal maintenance. What will be your monthly net earnings? What will be your spouse’s monthly net earnings? Did you enter a lower-paying career earlier in the marriage because you and your spouse agreed for you to choose a job with more flexibility to allow caretaking for children? Did you stay at home to care for the children and remain out of the workforce and now must find a job post-divorce?

Make sure your attorney has experience working with couples in your current situation. While assets likely get split equally at the end of the divorce, each spouse’s ability to earn income post-divorce must be part of the discussion. What happens to you financially when your timeline to recover is less? Typically, the response is to “get a job” which doesn’t resonate well for a divorcing spouse that hasn’t worked in years or has only worked when not taking care of the children. The reality is that it is difficult for someone in that position to secure adequate employment. 

If you were married 10 years or longer, you can claim Social Security benefits from an ex-spouse. Statistically, more than half of gray divorces occur to couples in first marriages, with more than 50% of gray divorces involving couples who had been married for more than 20 years. Social Security alone is usually not enough income per month to pay monthly expenses. Spouses who experience a gray divorce, on average, can count on less than $1,200 per month from Social Security. 

So, what should you do if you are facing a gray divorce?

Don’t panic. Take a deep breath. Speak with individuals who can help you with this process.

The biggest mistake I see with gray divorce clients is that they are so intent on being done with the divorce that they don’t want to fight for what they really need to be fighting for. Basically, giving up too soon to be done quickly. This emotional reaction is normal as the need to limit expenses and be done quickly is top of mind. However, years from now you will need the money you may have missed by wanting to be done quickly. So, take the time necessary during the divorce process to review all assets and finances so you can make the best-educated decision for yourself. There’s a happy medium between giving up right away and digging in for a long and expensive divorce. Take out the emotion, so you can be in the best mindset to listen to the advice provided by your attorney and financial advisor. The lifestyle change is a lot to think about and handle. Don’t make any big decisions right away while your emotions are still at their high.

Gray divorces typically focus on money. When you’re getting a divorce, you’re having to make the most critical financial decisions of your life at an emotional time. Make sure you take the time needed to sort through all the assets and future risks. Hire a divorce attorney with experience in this area. Your attorney should then refer you to a financial adviser who is also experienced in working with post-divorce clients like you in age and finances. Once you are confident in the advice provided by both, it will be much easier for you to agree to a settlement or safely proceed to a trial.

Discuss expectations, health insurance, housing, and spousal support with your attorney.

A common misconception that I see in gray divorce cases is that a spouse will automatically believe that s/he can continue to live the same lifestyle as before because of the length of the marriage. Unfortunately, just because you have been married 20+ years doesn’t mean you will receive a judgment that will allow you to live the same lifestyle as when you were married. Getting over that mindset can be hard, but it is best for you to have an open mindset going into the divorce process, so you are not surprised or disappointed at the end of the case.

Another concern in gray divorce cases is whether a nonworking spouse can qualify for a mortgage. This needs to be known and a discussion with a mortgage lender to determine the answer should occur early in the case. The answer usually influences spousal maintenance which is important when trying to negotiate a settlement. 

What will be the monthly cost for health insurance, out-of-pocket healthcare costs, and potentially the continuation of long-term care insurance are all big concerns for gray divorces. As with housing, these costs need to be known and taken into consideration to determine spousal maintenance. 

Also, for both the paying spouse and the receiving spouse, what is the monthly amount of spousal maintenance and when will it end? Many discussions with your attorney should occur on this topic during a gray divorce as it affects both spouses’ finances monthly.

Typically, a gray divorce ends a long-term partnership. Being too focused on one asset or only one aspect of the divorce case is not seeing the forest for the trees. You need to look at the entire picture to achieve the best result possible. 

Should you need the advice of an experienced divorce attorney, know that we are here to help and ready to discuss those issues with you.

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