How the Grey Divorce Impacts Finances

Written by: Robert D. Bordett, CFP®, CDFA®Advisors, perhaps you’ve heard about the phenomenon known as the “grey divorce” and are wondering what it’s all about and how it might impact your married clients.An important study conducted by the Department of Sociology and the National Center for Family and Marriage Research at Bowling Green State University entitled “The Grey Divorce Revolution” addressed this issue. I was attending the Institute for Divorce Financial Analysts’ annual conference in Orlando where I saw Justin Reckers do a presentation about the study and offer us a few insights:Typically, those who are considered as going through a grey divorce are couples over the age of 50.In 2010, over 640,000 people in this age group got divorced. That’s roughly one in four divorces, compared to one in ten in 1990.If we assume that these rates remain constant over the next two decades, a conservative assumption would be that the number of people over age 50 that experience divorce in 2030 would rise by 1/3, to over 828,000.

What are some of the concerns of those going through a grey divorce?

“I’ve worked for more than 30 years to support my family and now I’m ready to slow down, but the divorce will keep me from doing so.”“Why does my spouse want a divorce when we’re both in our 60s and don’t have much time left?”“I don’t want to end up a burden to my children now that I cannot support myself and have no spouse to care for me.”“We chose not to save aggressively for retirement because my husband expects a large inheritance. If we get divorced, I will have no right to that inheritance.”“My husband has been gifting assets to the children from his first marriage. I’m worried that there’s not going to be anything left for me.”

How can a CDFA or other professional help people going through a grey divorce?

1) Retirement planning:

Social Security

Pension Maximization

Taxes affecting retirement income

2) Estate Planning:

Legacy planning

Current or planned asset gifts programs

Co-ownership of assets

3) Health care:

Current health care planning

Long term health care insurance

4) Alimony:

Short duration of marriages

Splitting fixed income

Lump sum buyouts

If your clients are experiencing a grey divorce, it’s important to contact a CDFA or other divorce financial professional to help mediate these very complex issues.Related: How to Find the Sweet Spot in Any Deal