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Unfortunate probabilities dictate that advisors likely have a fair amount of clients that are divorced or eventually will be. Obviously, divorce is a negative event, but it’s also a fact of life – an unpleasant one at that.
Indeed, divorce is a life-altering event for the involved parties. However, dissolutions of marriage aren’t linear. Depending on circumstances, a marriage ending can “hit” differently and those circumstances include the ages of the partners. With that in mind, advisors need to pay particular attention to the concept of gray divorce, especially when it comes female clients.
Some experts define gray divorce as pertaining to couples 65 years old and up while others say it’s pertinent to the entire baby boomer generation. Either way, advisors should be aware that gray divorce is on the rise because no generation is divorcing as much as boomers are.
Data confirm why advisors need to be aware of gray divorce. According to a 2022 study in The Journals of Gerontology, divorce rates for people 50 years old and older doubled from 1990 to 2019. Worse yet, that rate tripled for those 65 and up. As recently as 2019, nearly 10% of all divorced folks in the U.S. were at 65 and older.
Women Particularly Vulnerable in Gray Divorce
Regardless of age, women are especially vulnerable following divorces, financially speaking. By some estimates, a women’s income can be pared by up to 40% in the 12 months immediately following the end of a marriage. Those vulnerabilities are amplified for baby boomer women.
Many women in that generation didn’t work, worked sporadically because they raised families and took care of aging loved ones and/or weren’t beneficiaries improving wage trends for women. As a result, a woman in some or all of those situations was likely dependent on her husband’s income and thus incurs an added pinch in divorce. There are other reasons advisors need to ensure they have bespoke game plans for women going through gray divorce.
“Women also tend to earn lower incomes than men due to a persistent wage gap; they tend to have less savings, and near-retirees who are divorcing don’t have much time to make up the difference. Divorced women can claim a Social Security benefit based on their own earnings or a former spouse’s earnings history, but the latter option is generally worth only up to half of an ex’s benefit,” reports Greg Iacurci for CNBC.
Take Preventative Steps
It’s not an advisor’s job to forecast divorce, but there are steps advisors can take to help women whose marriages end, regardless of the reason. Some those steps include being proactive and empowerment.
Advisors should encourage women that aren’t the primary breadwinners in their marriages to still active roles in household budgeting, investing and residential real estate decisions, among other important financial decisions.
The more engage any spouse is in household finances, the better equipped they’ll be to handle those issues on their own should the marriage dissolve.
Related: New Era of Female Financial Empowerment Has Arrived