Amazon headlined the news in recent years, in particular for its decision to move its headquarters to Arlington, Virginia. More recently, however, due to its founder Jeff Bezos concluding his divorce with his now ex-wife in July 2019. The couple joins millions of Americans divorcing after the age of 50, as the rate of divorce in the U.S. doubles since 1990. However, unlike the other millions of Americans whose finances are shattered as a result of their divorce, the billionaire couple is lucky enough to leave with theirs remaining relatively intact.
Bloomberg recently published an article titled “Divorce Is Destroying the Finances of Americans Over 50” where it analyzed the effects of divorce on couples aged over 50, often referred to as a “Gray Divorce”. The article asserts that if a couple is divorcing in middle age, then they are at the greatest risk of destroying both their emotional and financial wellbeing, far worse than if divorcing when younger. Bloomberg has referred to a number of studies and research papers in support of its assertion.
The article references a study conducted by Susan Brown, a Sociology Professor at Bowling Green State University, Ohio, and co-director of the National Center for Family and Marriage Research. This study compared emotional health and depression amongst middle-aged persons who had gone through a divorce, and persons whose spouse had actually died. The study found that the level of depression was, in fact, higher amongst those persons who had divorced in their middle age, than those who were widowed. Further, the study also found that aside from the devastating effect on the mental state of the health of gray divorcees, going through a divorce at that stage in a person’s life was having a significantly negative effect on their finances.
Susan Brown’s researchers found that if divorcing after the age of 50, your financial estate will most likely decrease in value by 50%. Of course, it would be expected that any divorce would result in the depletion of a couple’s net worth, however, a reduction by 50% is a striking statistic. The study also looked at the effects of a divorce after the age of 50 on the couples’ incomes and standard of living. It found that incomes generally diminish after a gray divorce and that the effect is particularly harmful to women. The study found that the standard of living for women in gray divorces reduces by a startling 45% – compare this to divorcing younger women where the figure is halved. Gray divorcing men do not escape either, although the effects are not nearly as severe. The study found that men aged 50 or over who go through a divorce, can expect their standard of living to drop by 21%, with much less or negligible effect on younger men going through a divorce. Further, persons who are divorcing in their middle ages appear to have a much more difficult time recovering financially from a divorce. Older divorcees, being in the later stages of their careers, simply don’t have time to undo the damage done by the divorce on their finances. A contributing factor for some stay at home men or women, who spent years caring for their children, is that it can be very difficult to re-enter the workforce at middle age. They are likely to have to spend time and costs retraining or re-entering the workforce at a lower professional level than previously when they were employed, or for less income.
In 2017, Brown conducted a further study which found that American women aged 63 and older who went through a gray divorce, have a poverty rate of 27%. That is more than any other group at that age, compared with 11% of gray divorced men, and only about 3% of couples who stayed married or re-married after a divorce. While the intent of Social security benefits in the U.S. is to ensure senior citizens do not fall below the poverty line, the rules surrounding the eligibility for such benefits result in many older divorced citizens—and in particular women—without recourse to the benefit. An ex-spouse is only eligible to access his or her ex-spouse’s social security benefits if their marriage lasted longer than 10 years.
According to the research conducted by Bowling Green State University, the overall divorce rate in America is reducing for persons under 45, while rising for couples over 50 years. The reason for this is at least in part due to the “Generational Divide”: Younger Americans under the age of 50, for differing reasons, are choosing to either delay getting married or to not get married at all. If they do get married, they are less likely to separate or divorce. However, older “Baby Boomer” couples, are continuing to divorce at increasing rates. Brown estimates that there will be almost 30% more gray divorces by 2030 than in 2010, and four times more than the older persons who divorced in 1990.
So if divorce is becoming increasingly common and high-risk when you are older, how do you recover if it happens to you? From the very beginning, it is important to work with your lawyer to develop a strategic plan and approach to the case which preserves assets. The goal in a gray divorce should be to resolve the matter in such a way that allows both parties to move forward as “whole” as possible. This usually means avoiding contested litigation and reaching a settlement through means of negotiation, mediation or collaborative divorce.