Did you know divorce came in different colors?
Puns aside, “grey” or late-life divorce has become a considerable enough trend to warrant its own category. Every couple’s circumstances are unique: some have grown kids, others are childless; some have built up a considerable next egg while others live paycheck to paycheck. What unites them all is a decision to untangle a family life in their 50’s. Sociologists argue whether this trend is caused by increasing life expectancies, a wider acceptance of divorce, or some other factors. No matter the cause, statistics are difficult to ignore: according to the National Center for Family and Marriage Research at Bowling Green State University, people 50 and older were found to be twice as likely to go through a divorce in 2014 compared to 1990. For those aged 65 and over, the increase was even more dramatic.
Divorce at any age is one of the top most stressful life events. One may argue that to be especially true for women affected by grey divorce. As a neutral financial professional on divorce cases, I am often a witness to financial risks that late-life divorce poses for women. Here is what you need to know.
Grey divorce wreaks havoc on fragile finances
From the money standpoint, divorce is not a fun walk in the park for either of the spouses. However, financial consequences of a grey divorce are particularly damaging to women. There are three objective reasons for that.
First, young women have more years ahead of them to recoup financial losses that result from a divorce. A 28-year-old woman has many more options than someone 3 decades older when it comes to professional opportunities and training. With much time ahead to accumulate and compound savings, time is on the younger person’s side.
Second, men are typically better positioned than women to weather the negative financial consequences of divorce because statistically they tend to earn more over their lifetimes. The data from the White House’s Equal Pay initiative shows that on average, women working full-time earn 78 cents for every dollar earned by men. The pay and savings gap is even bigger for women who took extended time away from full-time work for parenting and homemaking.
Lastly, women’s retirements tend to last longer than men’s. According to the Social Security Administration, a man reaching age 65 today can expect to live, on average, until age 84.3 while a woman in the same situation has the life expectancy of 86.6. Those are mathematical averages, but they spell the same result: when combined with lower retirement savings and Social Security, the situation calls for expert financial planning.
Emotional aspects of grey divorce
Given the tough financial reality, it is no wonder than many women hesitate before initiating a late life divorce or are emotionally devastated with their partner suggests it. It is easy to get stuck holding on to the time they have invested into the relationship, or think that they will have no chance for a peaceful and financially secure life after the divorce.
For those who find themselves in this situation, my advice is to see clearly that nothing they do in the future will change the fact that they have invested years of their lives into the marriage that is not working. There is an accounting concept of “sunk cost” – an investment made into a piece of machinery or a project that is unchangeable. Accounting theory teaches us that sunk costs must be ignored when making a forward-looking decision. While that may sound dry and harsh, approaching your circumstances from that angle might shine a different light on them.
As for limited opportunities, I would encourage women to approach their options with curiosity and an open mind. True, your choices may be not as attractive as they would have been 2 decades ago. However, that does not mean you do not have choices. Try as hard as you can to look at options and consequences objectively. You may just find that the actual damage of the situation can be minimized, and that the fallout is not as devastating as you had once thought.
Grey divorce for women: 3 smart steps to take back control
If you are a woman facing the reality of a late-life divorce, there are three things you can do right now to take back control and improve your chances of financial well-being after all agreements are signed and final.
First, work with a professional team that will inform and support you through the process. Divorce is stressful. There are many potential pitfalls and unexpected turns, especially if you are not a divorce professional (which most people aren’t). Surround yourself with expertise, and be sure to work with a financial planner who will ground your decisions in financial facts, a deep knowledge of taxes and reliable projections – not back of the cocktail napkin math.
Second, judge not. Women are often their own harshest critics, and beating yourself up for your perceived shortcomings is not going to help you resolve the situation or make better decisions. Allow yourself a generous dose of forgiveness. Be gentle with yourself. The outcomes will be better for it.
Lastly, dig deep to find the resolve and courage to deal with your situation honestly and directly. It can be tempting to bury your head in the sand, hide under a blanket and never face the light of day. While that approach may delay the inevitable, it does not give you the benefit of shaping the outcome or gaining time. Show up, even when it is hard.
In closing, be sure to choose experienced professionals who can help you reach resolutions quicker. Invest time and effort in understanding your finances: that is going to define your ability to rebuild and thrive after the divorce. And be kind to yourself in the process. After all, there is a life on the other side!