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According to some studies, the average age for divorce in the U.S. is 30 years old and 60% of all dissolved marriages involve people ranging from 25 to 39 years old.
One takeaway from those data points – a credible one at that – is some people may be getting married too young. Perhaps they had long courtship periods in their late teens and early 20s and when marriage is factored into the equation, the couple had been together eight, 10 or 12 years. That’s a long time for people in the early to mid-30s – man or woman.
Those divorce rates are something for advisors to be mindful of and the same is true of the phenomenon known as gray divorce, or dissolving a marriage after 50 years old. Unfortunately, that scenario is increasing in frequency, putting new burdens on the couple while requiring advisors to be ready with the strategies and tools needed to help clients get through this tough time. Financially speaking of course.
Tips for Thriving After Gray Divorce
Beyond the emotional component, gray divorce brings myriad financial complexities because, broadly speaking, a couple that’s say 55 years old is likely to have more assets and wealth that need to be divided up.
Depending on things go in court, there could be instances where the client that’s the higher earner must pay alimony meaning they’re not only responsible for taking care of themselves, but the former spouse, too. That increases the need for proper budgeting. Here’s some advice for clients.
“To begin, itemize your fixed costs. These can include rent, car payments, insurance, groceries, and utilities,” notes Sheryl Rowling of Morningstar. “Your variable (flexible) expenses, such as travel, restaurants, and gifts, can be adjusted based on your available income. As your postdivorce lifestyle becomes more certain, you can revise that budget.”
Another area in which advisors can be sounding boards for clients dealing with gray divorces is solving the riddle of what to do with the primary residence. That issue takes on added importance if there’s still a mortgage on the house and if both spouses were contributing to that bill and property taxes.
Some of this “mystery” could be solved by the courts, but that could also mean a client is left with too much house – a scenario certainly requiring the assistance of an advisor.
Other Gray Divorce Considerations
Depending on the ages of the clients involved in the gray divorce, some may be fully retired while others may still be working full-time and some may be in the middle or semiretired. Due to the divorce, some may be forced back to work while others may have the option. In all cases, advisors should bring up the possibility of returning to work because it can delay the client’s need to tap investment accounts , which is particularly to someone paying alimony or someone not receiving it.
Gray divorce can also open the door to some Social Security complexities for which clients will lean on advisors for help.
“If you were married at least 10 years, your Social Security benefit will be the greater of your own benefit or half your ex-spouse’s benefit. Certainly, if this makes a difference for you, consider the timing of your gray divorce,” adds Rowling. “For example, if you’ve been married for nine and a half years, you might want to delay the final decree for six months.”
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