Breakups after 50: Maintain financial security through a “gray” divorce

We hear everyday about how the population is aging. As life expectancy goes up and the massive number of baby boomers enters their golden years, there are a myriad of new challenges. Although healthcare issues get the most attention, financial matters are every bit as important. One underreported financial issue facing older individuals is the effect of a late or “gray” divorce on retirement plans.

Divorce rates among older couples have doubled since the 1990’s, and this puts a spouse who has stayed at home for their adult life at particular risk. There is also a risk that the wage-earning spouse has taken control of the finances in the family, leaving the stay-at-home spouse with no knowledge or control over the marital estate. It is easy to see how this circumstance can throw a retirement plan into tumult. 

The following tips probably apply to all divorce proceedings, but have special application to those who are closer to their retirement.


It’s fundamental, but so many people don’t do it. A budget is always the foundation of sound financial planning, and having one for a couple can make it easier to adapt the budget to single living. So, even in the most solid marital partnership a budget is extremely important. Once a divorce becomes imminent, then a revised budget is essential. It is simply the only way for individuals to know how much cash they will need to survive.

Back to work

Again, this one applies to everyone facing separation. Having an income stream will just make it easier to make the transition. Also, in addition to the obvious financial benefits, holding a job will help build confidence. Also, being on a payroll will help increase your benefits when you start collecting Social Security.

Get your own retirement account

Establish an IRA before the divorce is finalized – it will give you tax benefits to do it this way and you will avoid penalties.  If you already have the IRA, don’t cash out. There may be a tendency to want cash on hand to smooth the transition, but this is when the penalties are worst, so it is best to find another way to generate cash-flow.

Take a strategic approach to real estate assets

This is a nicer way of saying, sale of the marital home may be essential.  Again, you don’t want to cash out after the sale, but a smart approach to proceeds from sale of the marital home can result in getting a head start on a new retirement savings plan.

Divorce is destabilizing in any circumstance, but in the context of an older couple there can be greater challenges. Following these steps can help reduce the blow and get you to the next stage of life.