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‘Gray Divorce’ and Important Implications to Consider

| February 07, 2024

Facing a divorce after the age of 50, especially as you near retirement, can be especially fraught with financial implications you may not have considered. Even if you’ve been anticipating this significant life transition, often referred to as “gray divorce”, it may not have been a part of your retirement plan. While divorce at any age impacts just about every part of your life, the financial impact of divorce can be especially stressful at this stage. Understanding the many factors that must be thought of can be helpful as you move through this difficult time. In this article, we review many considerations regarding the financial impact of divorce and provide some guidance as you navigate divorce after 50.

For many people, the initial financial impact of divorce comes in the form of the cost of legal proceedings. This is typically a short-term consequence, but there are a number of long-term considerations that may need to be addressed. Below, we review some of the most common.

Financial and Retirement Accounts

Report shows families over the age of 55 had an average net worth of $1.5 million in assets.1 If your household falls within this average, then it’s certainly a significant amount to put in order. Take your time to go through all of your assets so that you can determine the fairest and most equitable way to distribute the money between you. This includes checking, savings, and retirement accounts. It’s often recommended that all accounts be frozen until you have come to a legal agreement.

The process may be direct if your retirement accounts are separate, and you have each contributed independently of one another. In this case, these accounts may be considered individual property. However, this can be more complex because where you live plays a role in how assets are split by state law. After such matters are settled, be sure to update the beneficiaries on your accounts.

Real Estate Assets

Among your assets, real estate can be challenging to determine how to split. Many couples over 50 own more than just their primary residence, such as a vacation home, rental property, or timeshare. Real estate is a tangible asset, unlike your savings or checking account. While some who are going through a divorce may decide to simply choose which property to keep, it can also be advantageous to have the properties appraised to determine the equity in each. This approach allows you to sell and determine the proceeds to distribute to each of you.

Once you’ve settled on your real estate, you may want to think about its future role in your finances. Can you apply the proceeds to a new property that generates income, or invest it in some other way that helps to secure your financial future?


Annuities in divorce are complex and are not like other marital assets that can be divided readily by both spouses. Annuity contracts vary among provider companies, and each has its own set of rules, along with being state-regulated. Generally, the options available are to withdraw the funds with a direct distribution to each of you, transfer the amount awarded to you to an IRA, or withdraw from the original contract and start a new annuity.

In many cases, an annuity that you owned before being married, with no contributions made during the time of your marriage, could be looked upon as individually owned property. This can be especially helpful when facing the financial impact of divorce after 50, as the funds wouldn’t need to be divided, and you could keep the annuity intact.

Long-Term Care

Planning for your future healthcare needs can’t be overlooked during this time of transition, especially if you’re over 50. If you find yourself in need of long-term care, those costs can range from $20,000 a year to more than $100,000.

While you may have planned for long-term care if needed during retirement when you were married, it is time to reassess your plan. You may now find yourself in a different financial situation, and the funds put aside in your joint retirement plan are no longer available. Luckily, there are other strategies to consider. For some, long-term care insurance, life insurance with an accelerated death benefit, or even a reverse mortgage may be affordable options to help pay for long-term care.

Health Insurance

It’s important to attend to your health insurance as soon as possible when facing divorce, especially after 50. If you didn’t have your own insurance and were covered under your former spouse’s employer-sponsored health insurance, you’ll need to find a plan that suits both your health needs and finances. If you won’t have coverage through your workplace, then utilize the federal health insurance marketplace to see what options are available. If you are 65 or older, then Medicare is available for you. However, to avoid late fees, be sure to enroll within eight months of losing your prior insurance.

Retirement Income and Divorce After 50

Retirement income is important to consider for anyone going through a divorce after age 50. If you are still working and have your own retirement savings, such as a 401k or IRA still intact, but you were also relying on your former spouse’s retirement income, you’ll need to review your retirement timeline and strategy. If you’re already retired and dependent on your former spouse’s income, you will need a plan to meet your income needs.

Working with a Financial Advisor to Secure Your Financial Future

Divorce is world-shattering for many people, and thinking about the financial impact of divorce may be the furthest thing from your mind in the early days. However, it’s important to ensure you can afford your lifestyle and needs. A financial professional can help you work through the numbers and devise a plan for moving forward.


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