An analysis by business news channel CNBC has found that women who divorce in their later years — which is often referred to as “gray divorce” — are put at much more financial risk than men who go through a gray divorce. This is a phenomenon of growing concern because CNBC also found that gray divorce numbers have more than doubled since the 1990s for people age 50 and older and have tripled for adults over age 65. CNBC added that some fifty years ago, only about 8% of Americans who divorced were age 50 and older. But by 2019, that share had jumped to 36%.
According to Griffiths Law, the city with the highest senior divorce rate in the U.S. is Denver. Census Bureau data from 2018 showed 28% of Denver residents aged 65 and older were divorced. The Colorado Legal Group weighs in to say that while U.S. divorce rates in general have been declining over the past few decades, there has been a spike in divorce rates in Colorado in recent years. One statistic had the state’s overall divorce rate at 12% in 2021. This source stated that baby boomers born between 1946 and 1964 accounted for the highest divorce rates of all age groups, but the numbers fall noticeably among individuals age 75 and older.
How Colorado’s Older Women Can Be Impacted by Divorce
Whatever the overall statistics may be, CNBC cites a certified financial planner as saying a consistent thread is that gray divorce typically “has more negative implications for women than for men.” Studies have found a woman’s household income drops as much as 40% in the year after a divorce. The hit to income is less severe for men, generally hovering around 20%.
CNBC observes that the financial disparities between the sexes seem to be less pronounced for younger generations of women due to a greater likelihood of them having been in the workforce compared to older women. Many older adults who divorce today were among those who adhered to the traditional roles where a man was the household’s main or only breadwinner. Added to this fact is a persistent wage gap that has always had women earning lower incomes than men. One result is that women have less savings, and when divorcing late in life they have little time to make up the difference.
Additional factors are that while remarrying can help women regain some financial standing, women are less likely than men to do this. According to one study mentioned by CNBC, only 22% of women re-partnered within a decade after divorce, compared to 37% of men who did, putting the women at a “sustained economic disadvantage into old age.” One particularly startling statistic is that poverty levels among women old enough to qualify for Social Security retirement benefits are almost twice as high for women who divorced after age 50 as for those who divorced before age 50.
What Can Women in Colorado Do to Protect Themselves in the Context of Gray Divorce?
In its analysis, CNBC outlined a number of steps women can take to protect themselves financially — either in the event of divorce or as preventive measures “in case” a divorce might happen. These include:
Have an active role in household finances. Have a good grasp of household spending, savings, mortgage payments, bank accounts, retirement assets, etc. Besides knowing your financial picture more fully, being engaged in these matters will make you better equipped to handle your own finances if you become single again.
Have some money you can call your own. As a couple, do not commingle all your financial accounts. With credit cards, have one or more in your own name instead of just being an “authorized user” on your spouse’s card. Taking steps like these can ensure you have access to your own funds so your spouse can’t shut off such access if your relationship goes south.
Don’t overlook “your” retirement funding. Couples often set up retirement accounts in one spouse’s name, anticipating that the couple will naturally share benefits when the time comes. But women should consider investing or saving in their own retirement accounts. While it is true that retirement savers typically need earned income to open and contribute to an IRA (individual retirement account), women who don’t work can open a “spousal IRA” based on their spouse’s income. CNBC notes you must be married and file a joint tax return to open one. Details on spousal IRAs are available online from a number of sources, such as https://www.investopedia.com/terms/s/spousal-ira.asp and others.
Plan carefully when claiming Social Security benefits. Social Security is an important source of guaranteed income in retirement, particularly for women. The timing and sequencing of claiming benefits can affect how a woman will fare financially in the event of a divorce (this strategizing also applies to widowhood).
Divorced women can claim a Social Security benefit based on their own earnings or in some cases their former spouse’s earnings history. (This latter option is generally worth only up to half of the ex’s benefit.)
As another example, if a husband is eligible for a larger Social Security benefit than that of his wife, he could defer claiming benefits to age 70 in order to maximize his lifetime monthly benefit. This would increase the monthly benefit his wife could receive upon divorce. Because of the multiple and complicated options and impacts around claiming Social Security benefits, consulting with a professional adviser would be wise.
Be judicious with alimony. If a woman receives alimony after a divorce, she should aim to save some of it. This is “unfamiliar” income that needs to find its place in your overall financial picture. Plus, alimony often lasts for only a limited time. As CNBC quoted one certified financial planner: “Just because you get alimony, it’s not business as usual” relative to spending levels. “You probably need to reassess your lifestyle.”
Consider a prenuptial or postnuptial agreement. Although sometimes looked at negatively as somehow anticipating a marriage breakdown, a prenuptial or postnuptial agreement is also a practical strategy for looking after a woman’s financial well-being, not just for divorce but also for instances where a woman might leave the workforce to care for children. One financial expert said if that occurs, it generally dents the caregiver’s earning power over the long term, and a legal agreement can help protect against some of that risk. And, of course, it would also provide protection in the event of a divorce. This is another situation in which you would be advised to work with an experienced attorney who specializes in such legal documents.
