Aging Apart: How Gray Divorce is Redefining Marriage and Retirement

John Hannah |

A new trend, known as “gray divorce,” is a phenomenon that is redefining marriage and retirement in America. It refers to couples aged 50 and older who are getting divorced.

A recent study by Bowling Green State University indicates that younger generations are less likely to get divorced than their older counterparts. Divorce rates over the past thirty-plus years have doubled for couples over 55 and tripled for those over 65. Those are staggering numbers, leading many to question the reason behind this increasing trend and the potential financial impact it may have on those navigating this experience.


Why is this happening?


The gray divorce trend could come from several different factors, including:

  • The Taboo of Divorce

The idea that divorce is no longer looked upon as a taboo as much as it once was, and the practice is much more acceptable.


  • Empty Nest Syndrome

As each kid leaves the house, the parents don’t feel like they have to stick it out any longer for their benefit.


  • Money Management and Spending Habits

For older couples, especially those in retirement who no longer have steady income streams coming in, one spouse's mismanagement of money or poor spending habits can significantly strain the marriage and golden years.


  • Social Media and Self-Improvement

With the promulgation of social media, Americans in their 50s and 60s are now looking for more excitement and self-improvement, moving away from the person they were while married. There may have been self-esteem issues, boredom, and a lack of experiences and fun, and people feel like they only live once and should live their best lives.


How does gray divorce redefine marriage?


The prevalence of gray divorce is essentially redefining marriage in today’s uncertain and often volatile world.

  • Following traditional marriage practices

Young couples may be more hesitant to participate in joint accounts, which are traditionally a rite of passage for newlyweds and are typically beneficial for tax purposes.

  • Growing Apart

When you are young and just married, the thought that you may one day grow apart and get divorced really isn’t at the forefront of your mind. However, this trend is challenging the dynamics of traditional marriage and the concept of vowing to a lifelong commitment to your partner.


  • Emotional Impact

After a lifetime of marriage, one of the partners and even the children could experience emotional turmoil, including resentment, regret, and hurt feelings. Even after a gray divorce, you may meet somebody and consider marriage again. However, people often underestimate how the stirred-up emotions they experienced during their gray divorce may redefine how they see a future marriage.


How does gray divorce impact your retirement strategy?


Gray divorce could significantly impact multiple aspects of your retirement strategy.

  • Separating Bank and Brokerage Accounts That Impact Both Your Retirement

Many couples have spent decades joining accounts and listing each other as beneficiaries. There are bank and brokerage accounts to go through and determine who gets what.


  • Obtaining a Qualified Domestic Relations Order (QDRO)

As you may expect, if you are married and get divorced, your spouse has the option to receive half of your 401(k). A QDRO is used to move the funds without the normal 10% early withdrawal penalty.


  • Co-signing for an Asset

One spouse may have co-signed for another for an asset, and this can provide challenges if one spouse isn’t as good with money management as the other.


  • Review Your Finances

Both parties will now have to do a comprehensive review of their financial world, re-write wills, estate plans, and everything else a divorce entails regarding retirement. It can be a huge enterprise that would require you to pay careful attention to your decisions.


Consult with a qualified financial professional

For anyone considering a divorce or going through one, it is complex and emotional and requires careful decision-making that will impact you financially and emotionally in the present and potentially well into your retirement. If ever there was a reason to consult a financial professional, it would be for this type of event. Emotional decision-making can lead to poor decision-making and mistakes that might have been avoided had you enlisted help from a trusted third party who could review your situation and make decisions without the emotional factor fogging up the process. If you are considering divorce or even in the process, consider scheduling a meeting with your financial professional today.


Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.


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