Divorce is one of life’s most difficult transitions—emotionally and financially. For those experiencing “gray divorce,” typically defined as the end of a long-term marriage in mid-life or later, the financial consequences can be particularly significant. These couples often have accumulated assets intended to support their shared retirement, making it all the more important to approach the process with clarity and planning.
Though overall divorce rates in the U.S. have declined, divorce among older adults—especially Baby Boomers—continues to rise. With retirement on the horizon or already underway, a thoughtful and fair financial settlement becomes critical. Here are four key areas that merit careful attention:
The Family Home
The marital home is often both a major financial asset and a deeply emotional one. While it may hold sentimental value—memories of raising children, family gatherings—it’s important to also view it as part of the overall financial picture. Post-divorce, maintaining the home on a single income may not be practical. If selling becomes necessary, obtaining a fair appraisal—ideally agreed upon by both parties—is essential. If not, consider averaging two independent appraisals to reach a reasonable sale price.
Investments and Property
State laws differ, but division of assets must be equitable—though not necessarily equal. Over decades, couples often build substantial investment portfolios and acquire various forms of property. Dividing liquid assets like stocks or bonds may be relatively simple, but real estate, business interests, stock options, or collectibles add complexity. These assets require professional valuation and thoughtful negotiation. In some cases, co-owned businesses may need to be sold, or a buyout structured, adding further legal and financial considerations.
Income and Cash Flow
If both spouses are still employed, dividing income might be straightforward. However, in cases where one spouse has been the primary or sole earner, adjustments will be needed. The non-earning or lower-earning spouse may need to re-enter the workforce and could require a larger share of assets to create a stable financial runway. These discussions should be transparent and focused on building sustainable solutions for both parties.
Retirement Accounts and Benefits
Gray divorces often involve unequal retirement savings, particularly if one spouse spent significant time out of the workforce caring for children or relatives. This disparity can affect not only personal retirement savings but also Social Security credits. Dividing retirement accounts typically involves a Qualified Domestic Relations Order (QDRO) for plans like 401(k)s or 403(b)s, or a “transfer incident to divorce” for IRAs. While these steps can be complex and time-consuming, they are critical for ensuring both parties have access to retirement resources.
Divorce is one of the most stressful life events anyone can endure, but by asking the right questions, working closely with legal and financial professionals, and staying focused on positive outcomes, it’s possible to move forward with financial clarity and confidence. Rothschild is committed to providing our clients with fiduciary guidance for all the major transitions of life, including the financial implications of divorce. If you or someone you know is facing such uncertainties, please contact your Rothschild advisor to learn how we can help.
Disclosure: This material is for informational purposes only and is not intended to provide investment, legal, tax recommendations or advice.
