When Grandparents Call it Quits: Guiding Clients Through a “Gray” Divorce

Susan Copeland, CFP®, CDFA®
Avantax Senior Financial Planner 

While the overall divorce rate in America has steadily declined since the early 2000s, it has nearly doubled for couples over the age of 50. As you move up an age bracket, the stats are even more staggering: One of every 10 people getting divorced is 65 or older, a rate that tripled between 1990 and 2021.

In other words, we’re in the era of “gray divorce,” a term coined in 2004 by AARP®.

What’s leading to this increase in divorce among seniors – and how can you potentially guide clients through this emotional and complicated time?

Gray Divorce Drivers 

There are numerous reasons married couples of any age turn to divorce. However, there are a few unique factors why those in their golden years are increasingly deciding to split with their spouse. Keep these reasons in mind when providing financial guidance to a client.

• Empty nest syndrome. When children leave home to embark on their adult lives, it can change the dynamic of a marriage. Spending more one-on-one time with a spouse can expose a lack of effective communication or other marital issues. 
• Financial differences. How to spend money in retirement can be a large source of marital strain. Financial infidelity is a growing problem among older couples, with a 2023 Bankrate survey uncovering 33 percent of boomers admitting to hiding financial secrets from their significant others. 
• Longer life expectancies. Life expectancies are steadily on the rise. Many people in their 50s realize they might live another 40 years, which makes them question whether their spouse is the person with whom they want to spend their golden years. 
• Individual growth. It’s no secret that people change as they age. They can discover new passions or alter their priorities – and sometimes these changes no longer align with their spouse’s goals. 

Unique Financial Considerations for Gray Divorcees

If your client is navigating a divorce later in life, they might feel like they’re starting over. Unraveling decades of combined financial assets and accounts can create heartburn for even the most experienced financial professional, but there are several unique financial planning opportunities you can focus on:

• Division of retirement accounts and pension plans. Many couples in their 50s have acquired significant assets within their IRA and pension, which makes it especially challenging to divide these accounts. The length of the client’s marriage will determine how some of these accounts are split, such as pensions. This topic can be a major pain point for a client who has worked their whole life to plan for a well-funded retirement and are now faced with the realization that they may no longer have enough to retire as comfortably as they’d like. As their financial professional, you can help clients create new cash flow strategies to help ensure their financial plan works for their new situation. 
• Loss of health insurance. This can be a significant concern and cost for older adults – especially for an unemployed spouse. Your client may need to explore private insurance, Medicare or long-term care insurance, and they’ll likely need guidance from their financial professional on how to plan for these costs. 
• Alimony payments during retirement. Depending on the length of the marriage, alimony payments might be necessary, not to mention substantial. It’s important to revisit a client’s financial plan to understand how they can best plan for this new expense.
• Mitigating the impact on children. Most parents going through a gray divorce have adult children. Although a child may be willing and able to help their parent after a divorce, most parents would prefer not to put their child in this position.  A sound financial plan can help ensure a parent doesn’t need to financially rely on their child post-divorce.

An Ounce of Prevention

Before divorce talks are even a whisper, it’s wise to encourage married clients to get involved with their household’s finances. Here are a few easy steps to help prevent future financial anguish or confusion for your clients:

• Prompt them to have regular discussions with their spouse about finances, including bills, budgeting and bank accounts. Do they know the login credentials for their online banking service? The balance of their mortgage? How and where joint funds have been invested?
• Postnuptial agreements can be a difficult topic, but remind your clients of this option if they’re feeling concerned about their financial security if they were to get divorced.
• If your client isn’t working outside the home, encourage them to talk to their spouse about funding a spousal IRA based on their partner’s earnings.

Want to learn more about how to help clients navigate a divorce? Check out our other blogs in the series here.