'Gray divorce' rates have doubled. But it's a costly move, especially for women

The divorce rate has doubled since 1990 for Americans over 55. For couples over 65, the rate has tripled.

And in financial terms, few “gray divorcees” are better off.

Gray divorce has surged in recent decades, federal data shows, even as the divorce rate for younger Americans has declined.

“One in 10 people getting divorced today is 65 or older. That is remarkable,” said Susan Brown, distinguished professor of sociology at Bowling Green State University in Ohio. “A growing share of aging adults will be aging alone.”

Several demographic factors shaped the gray divorce phenomenon, researchers say: The American population is aging. People are staying healthy longer. Couples are marrying later.

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Gray divorce exacts a steep cost

In dollar terms, divorce is costly to anyone. Yet, for older Americans, the costs are steeper.

“I haven’t seen a scenario in which either partner is better off financially,” said Elizabeth Windisch, a certified financial planner in Denver.

A man can expect his standard of living to decline by 21% after a gray divorce, according to research by Brown and her colleagues. A woman’s standard of living will plunge by 45%. Both partners see their wealth decline by half.

Women seem more likely to initiate a gray divorce, Brown said. And women tend to fare worse after the parting, at least in financial terms. Women are more likely to take custody of the children, along with those costs. Women who divorce after 50 tend to have less work experience than their partners, which means less potential for future earnings.

Here are a few of the biggest financial challenges facing older Americans who divorce, and tips for meeting them.

Rebuilding your shattered retirement plan

Problem: Gray divorce can gut your retirement account, leaving you little or no time to rebuild.

Solution: Make a new plan. If you haven't retired, save aggressively to replenish your savings.

In a gray divorce, a couple’s collective retirement savings may be redistributed into equitable shares, one for each partner.

That might not sound so bad, until you consider all the other expenses that come with divorce: Finding new homes. Shopping for new health insurance. Paying legal bills.

“It’s double the expense for pretty much everything,” said Michelle Crumm, a certified financial planner in Ann Arbor, Michigan.  

Crumm represented a client who was divorced at 50. She was a high-level executive. Her husband was a stay-at-home dad.

“She had to give half of her 401(k) to him. She has to pay him alimony,” Crumm said. “It looks on paper like this woman makes a ton of money, but in reality, there’s not a lot left.”

Crumm told her client her top priority should be “getting her retirement plan back on track.” That meant “maxing out everything she can” for retirement savings, diverting a larger share of her income into that diminished 401(k).

“She realizes she has a lot of work to do to catch up,” Crumm said. “She leases a car every year. So, we’ve had the conversation, ‘Should you buy a car?’ Maybe I go on vacation in the United States instead of a European vacation.”

The client’s oldest daughter is about to start college. Because of the mother’s high salary, the daughter probably will pay full price wherever she enrolls.

The client wants to send her daughter to a private institution. Crumm counseled her instead to go public: the flagship University of Michigan charges about $35,500 in in-state tuition, fees and living expenses, less than half the full cost of an elite private college.

Crumm put it bluntly: If the daughter spends four years at a private college, the mother may have to delay her own retirement by that many years.

“She originally said 62,” Crumm said. “I said, ‘We’re probably looking at 65 or 67.’”

Now, mother and daughter face a hard choice.

Returning to work after a long hiatus − or not

Problem: It's harder to earn money after a divorce if you haven't worked in years.

Solution: Figure out if you can live comfortably without returning to work, even if it means a tighter budget.

A gray divorce can be especially daunting for an aging spouse who, decades earlier, gave up a career to raise a family.

Patti Black, a certified financial planner in Birmingham, Alabama, worked with a client in her 50s whose husband of three decades asked for a divorce.

The woman was living in her dream home, now an empty nest, counting the years to a prosperous retirement.

“She had not worked in 25 years, I think,” Black said.

The woman soon realized she would never find a job with a salary that even approached what her husband earned.

“We worked very hard to come up with a plan so that she didn’t have to go back to work,” Black said. That meant giving up the dream home, buying a smaller one and living on a reduced budget.

Now, she’s waiting for the dream home to sell.

Divvying up the family home

Problem: You have to decide what to do with the marital home.

Solution: Consider all the costs of owning and maintaining that home before you decide who gets it − if anyone.

In a gray divorce, any marital home can feel like an asset − or a burden.

Let’s say the house has $250,000 in equity and 10 years remaining on the mortgage. If the settlement delivers the dwelling to one spouse, then that spouse probably also inherits the mortgage payments. And the property taxes. And the insurance. And the maintenance.

If the spouse elects to refinance the mortgage, that could mean giving up a loan with a historically low interest rate for a new one at 2024 rates, which are a lot higher. The same issue arises if the couple opts to sell the old home and buy two new ones.

“This can be a huge problem for divorcing couples,” said Monica Dwyer, a certified financial planner in West Chester, Ohio.

If the numbers don't pan out, the experts say, consider downsizing.

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Gray divorce poses many other financial complications, from Social Security benefits to health insurance, estate plans and credit card debts.

It’s almost enough to make you think twice.

“Count the costs,” Black said. “Maybe you try to ride it out. Maybe the money would be better spent on marital counseling than on a divorce attorney.”

Daniel de Visé covers personal finance for USA TODAY.