The Unfortunate Phenomenon of Gray Divorce
LFG Marketing | October 2019
Life can have a Whack-a-Mole quality: No sooner is one problem smacked down, but another one pops up. Sometimes, what pops up is a real surprise. For instance: Several government agencies report the overall divorce rate has dropped to its lowest level since 1980. The biggest factor in the decline: a dramatic improvement in the resilience of marriages among younger ages; these cohorts are marrying later but tending to stay married longer. This is a positive trend, both for individuals and society.
But there is a flip side: Among U.S. adults ages 50 and older, the divorce rate has doubled since 1990; for those over 65, it has tripled. This has given rise to the term “gray divorce,” which not only hints at the ages of the parties, but the long-term relationships that are being dissolved. According to Susan Myres, an attorney specializing in family law, “Although some of these divorces are occurring in second, third, or fourth marriages that are not of long duration, the majority involve long-term marriages.” How did this issue pop up among older generations?
There is no consensus. Some attribute it to longer lifespans. When the joint project of raising a family comes to a close, some individuals want something different – a different lifestyle, a different partner, a different purpose – for their next 20-30 years.
Others point to affluence. People with financial resources have more options and may be better equipped to start over, even at this later stage of life.
And since many of today’s gray divorcees were children of divorced households, there isn’t the stigma attached to it. Divorce may be unpleasant, but it’s common.
That said, the decision to unwind a 20-, 30-, or 40-year relationship is one fraught with economic peril. And older couples should be cautious about embracing this trend.
Bad Timing, Lots of Details
A divorce that occurs at or near the end of one’s working years is problematic simply because there’s little or no time to recover the financial losses that occur in the dissolution of the marriage. Two people who divide assets and live separately are going to have higher expenses, not to mention the legal fees that accompany the process.
A Pew Research Center report finds that “Unfortunately, all of these property divisions have the same effect as starting to save too late in life for retirement or suffering a major loss in the market: There are no longer enough working years to make up the loss.”
Furthermore, long-standing marriages usually have numerous and deeply intertwined financial connections, and unwinding them is often far from easy. Myres ticks off a short list of unique financial issues in gray divorce:
- Social Security
- Life insurance
- Lifetime health insurance
- Retirement packages, supplemental policies, and 401(k) plans
- Selling, or not selling the house
- Estate-planning documents that impact assets
Social Security alone presents multiple examples of the potential complications. By law, Social Security payments cannot be divided between two people; in a settlement, if one spouse is receiving Social Security payments, it impacts how other assets are apportioned. Contact the Social Security Administration for complete details regarding eligibility for benefits.
Timing matters: If the couple has been married for 10 years, a non-working spouse is entitled to a Social Security benefit based on the working spouse’s earning history. If one party has been receiving Social Security for less than two years, the other party has no spousal claim on his/her Social Security in a divorce.
But if the two-year window has passed, the divorcing spouse may be entitled to a payment that is essentially one-half of the other’s calculated Social Security payment.
The other items on the list can have similar layers of complexity. What happens to health care coverage? Who owns life insurance policies and pays the premiums? Does an asset (like a house) have to be sold to satisfy the division of assets? What about inheritance concerns; do you need to account for her descendants, his descendants, and their descendants?
Investing in the Relationship Can Save More Than a Marriage
Some marriages cannot be repaired, and it is perhaps for the best if some marriages are dissolved. But given the costs of deconstruction, couples with foresight might find it valuable, emotionally and financially, to invest in strengthening their relationship and avoiding a gray divorce.
Lifetime Financial Growth, LLC is an Agency of The Guardian Life Insurance Company of America® (Guardian), New York, NY. Securities products and advisory services offered through Park Avenue Securities LLC (PAS), member FINRA, SIPC. OSJ: 244 Blvd of the Allies, Pittsburgh, PA 15222 (412) 391-6700. PAS is an indirect, wholly-owned subsidiary of Guardian. This firm is not an affiliate or subsidiary of PAS. 2019-87106 EXP. 09/2021 This newsletter is prepared by an independent third party for distribution by your Representative(s). Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal or investment advice. Although the information has been gathered from sources believed reliable, please note that individual situations can vary, therefore the information should be relied upon when coordinated with individual professional advice. Links to other sites are for your convenience in locating related information and services. The Representative(s) does not maintain these other sites and has no control over the organizations that maintain the sites or the information, products or services these organizations provide. The Representative(s) expressly disclaims any responsibility for the content, the accuracy of the information or the quality of products or services provided by the organizations that maintain these sites. The Representative(s) does not recommend or endorse these organizations or their products or services in any way. We have not reviewed or approved the above referenced publications nor recommend or endorse them in any way. The title of this newsletter should in no way be construed that the strategies/information in these articles are guaranteed to be successful. The reader should discuss any financial strategies presented in this newsletter with a licensed financial professional.