Navigating a Gray Divorce

The divorce rate is growing among older couples. If you’re navigating a gray divorce, here are some things you should know.

“Till death do us part” no longer applies to a growing number of older couples. A Bowling Green State University study found that between 1990 and 2021, the divorce rate more than doubled for those ages 55 to 64, and the rate tripled for those 65 and older.

“People are living longer, they are healthier, and divorce doesn’t have the stigma it used to have,” says Lili Vasileff, a certified financial planner. But a late-in-life divorce can come with plenty of challenges.

How your assets will be divided in a divorce depends on where you live, Vasileff says. If you’re in one of the nine community property states – Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin – assets acquired during your marriage will be divided equally.

All the other states are equitable distribution, in which assets acquired during your marriage are split based on the spouses’ individual incomes, Vasileff says. In that case, lower-earning spouses may be entitled to a larger share of assets to maintain their standard of living after the divorce.

The rules for splitting assets in retirement accounts depend on the type of accounts you own. Plans covered by the Employee Retirement Income Security Act (ERISA), which include 401(k) plans and private pensions, must be divided through a qualified domestic relations order. A QDRO is issued by a court or state agency and recognizes a divorcing spouse’s right to receive all or a portion of the account owner’s defined-contribution plan or pension. Once both parties agree to the terms, the account owner gives the document to the plan administrator, and the QDRO must be certified by the court.

A QDRO isn’t required to divide IRAs that you accumulated during your marriage, but you will need a divorce decree. If one of you agrees to transfer IRA funds to the other, Vasileff recommends using a trustee-to-trustee transfer. That way, you’ll avoid incurring early-withdrawal penalties and income taxes on the withdrawals.

Once you’ve finalized your divorce, make sure to remove your ex-spouse as a beneficiary for your retirement, bank and brokerage accounts, along with your insurance policies.

Even older couples may still need to negotiate alimony and child support—and those obligations don’t necessarily end when the children are no longer minors. Vasileff recommends including details on how to divide the cost of tuition and other college expenses in your divorce agreement.

When calculating how divorce will affect your retirement income, don’t overlook Social Security benefits.

You (or your ex, if you were the higher earner) are eligible for up to 50% of your ex-spouse’s benefit, although the amount will be reduced if you file before you reach full retirement age (66 to 67 depending on when you were born).

For more information about your eligibility to claim your former spouse’s benefits, contact your local Social Security office or visit www.ssa.gov.

Ella Vincent is a staff writer at Kiplinger Personal Finance magazine. For more on this and similar money topics, visit Kiplinger.com.

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