The term “divorce gap” is becoming increasingly common, but it’s not always clear what it refers to. Today, it’s used to describe the differences in the financial, social, and emotional outcomes experienced by men and women following a divorce, particularly in older age. This phenomenon is increasingly relevant given the rising rates of “gray divorce,” which refers to divorces among those over 50.
However, while the gap is real, it is not inevitable. With the assistance of a skilled attorney, older women can minimize the impact of their divorces on their financial futures. Here’s what you should know about why the gap occurs, how it impacts women, and how you can protect yourself and your retirement during your split.
What Causes the Divorce Gap?
Women often face more significant financial challenges post-divorce compared to men. This disparity is partly due to historical income differences. Women, especially older ones, may have had fewer opportunities for career advancement, resulting in lower lifetime earnings and smaller retirement savings.
Moreover, women are more likely to have taken career breaks for child-rearing or caregiving, further impacting their long-term financial stability. The division of marital assets in divorces does not always compensate for these lost earning opportunities, leaving women at a disadvantage in their later years.
What Is the Impact of the Divorce Gap on Older Women?
These issues lead to a variety of difficulties for older women after gray divorces, including:
- Lower Retirement Savings for Women: Women generally have lower retirement savings compared to men. This is often due to lower lifetime earnings stemming from wage gaps and career interruptions for child-rearing or caregiving. As a result, when a divorce occurs, women are often at a disadvantage in terms of the amount saved for retirement.
- Division of Retirement Assets: During the proceedings, retirement assets are typically divided between spouses. However, the division may not always compensate for the long-term financial disadvantages women face. For example, if a woman has taken time off work to raise children, her retirement savings would be less than her spouse’s, making her more financially vulnerable post-divorce.
- Impact of Marital Duration: The length of the marriage can significantly affect the division of retirement assets. In shorter marriages, individuals might retain their separate retirement accounts, while in longer marriages, these assets are more likely to be divided. Since women often live longer than men, they need more in their retirement savings to cover these additional years.
- Cost of Living Adjustments: After divorcing, the cost of living as a single person can be higher per person than living as a couple. This increased financial burden can lead to a quicker depletion of retirement funds for women, who generally have less savings and lower earning power to begin with.
- Social Security Benefits: Women are also more likely to be affected by the rules governing Social Security benefits. If they were not working or had lower earnings, their Social Security benefits, based on their own work record, would be lower. While they might be eligible for benefits based on their former spouse’s work record, this depends on the marriage’s duration and other factors.
- Late-Life Divorce Implications: For older women, particularly those who experience a “gray divorce,” the impact on retirement funds can be even more pronounced. They have less time to recover financially before retirement, and their opportunities for increasing their income or restarting a career are often limited.
Divorce in later life can also lead to social isolation and emotional challenges, particularly for women. They may lose shared friendships or community ties post-divorce. Additionally, given that women often outlive men, the prospect of spending more years alone after a late-life split can be daunting.
Additionally, for older individuals, the stress of a major life change can exacerbate existing health conditions and lead to new ones. Women, who often have stronger emotional ties to their marital relationship, may experience more profound emotional impacts from divorce.
How to Reduce Financial Stress After a Gray Divorce
Despite these challenges, many women find ways to adapt and thrive post-divorce. They may re-enter the workforce, pursue education, or engage in new social activities. However, the necessity of such adaptations highlights the uneven playing field that exists post-divorce.
If you’re preparing for a gray divorce, you have options. Here are a few strategies you can use to minimize the impact of the divorce gap on your future:
- Learn About Retirement Assets: It’s crucial to have a clear understanding of all retirement assets, including pensions, 401(k)s, IRAs, and Social Security benefits. Understanding how these can be divided and the tax implications of each is essential.
- Budget and Reduce Expenses: After splitting up, it’s often necessary to adjust to a different standard of living. Creating a budget that accounts for single living and reducing unnecessary expenses can help manage finances more effectively.
- Increase Income if Possible: This could involve re-entering the workforce, working part-time, or even starting a small business. Upskilling or retraining for a new career can also be options, depending on age and circumstances.
- Maximize Social Security Benefits: Understanding Social Security rules is crucial. In some cases, you may be entitled to claim benefits based on your ex-spouse’s work record. It’s often beneficial to delay claiming Social Security until full retirement age or later to maximize these benefits.
- Work With a Skilled Attorney: While an attorney cannot change your work history or skills, they can help you achieve a fair settlement that accounts for the work you put into your relationship. Your lawyer can help you pursue spousal support and your share of the retirement funds to minimize the financial impact of your split.
Seek Expert Help to Protect Your Retirement During Divorce
The divorce gap is a multifaceted issue that affects women around Oregon. As the population ages and the rate of late-life divorces rises, understanding and addressing the unique challenges you may face in this situation has become crucial.
You can start the process of safeguarding your retirement during your split by scheduling your consultation with the experienced divorce attorneys at Regele Law, LLC. We are dedicated to helping our clients achieve their preferred outcomes from their divorces. Let us help you protect your financial future from the divorce gap.