Gray divorce, or the dissolution of marriage among older adults, can have significant implications for the standard of living of both men and women. As couples near retirement age, divorce can disrupt long-standing financial arrangements. It can also alter retirement plans, leading to economic challenges for both parties.
Understanding the impact of gray divorce on the standard of living is important for anyone navigating this life transition.
Financial disparities
A primary way that gray divorce affects the standard of living is through financial disparities between spouses. Kiplinger reports that women over 50 see their standard of living decline by 45% after a divorce, while men over 50 see theirs fall by 21%. This discrepancy may result from several factors. Wage disparities and interrupted career trajectories due to caregiving responsibilities are among them.
Asset division and retirement accounts
The division of assets and retirement accounts during a gray divorce can further exacerbate disparities in the standard of living between men and women. Women may receive a smaller share of marital assets, including retirement savings. This is particularly likely for those who have been out of the workforce, as well as those with low earning potential. As a result, women may face greater financial challenges in funding their retirement and maintaining their standard of living than men.
Social Security benefits
Social Security benefits also help determine the standard of living for divorced individuals, particularly in gray divorce scenarios. Spousal benefits based on an ex-spouse’s earnings record may be available to those who meet certain criteria.
Gray divorce has profound implications for the standard of living of both men and women. By understanding the challenges associated with gray divorce, parties can take proactive steps to protect their financial interests and maintain their standard of living.
