5 Tips for Surviving Grey Divorce in Retirement

By Guest Blogger: Michelle Petrowski Buonincontri, CFP®, CDFA

This article was originally published in  “The Street”


You were happy “once upon a time” and planned a future…. Now you’re 55 and getting a divorce.  Or maybe you’re 60 or even in your 70’s  and now part of a trend referred to as “Gray Divorce”, “ Grey Divorce”, “Silver Splitters”, or even “Diamond Divorcees”.

We know from reports such as the “Aging in the US  Retirement Security Trends in Marriage and Work Patterns May Increase Economic Vulnerability for Some Retirees” report to the Chairman, Special Committee, that divorce can worsen and create vulnerabilities for retirees. Additional research from Bowling Green State University’s National Center for Family & Marriage Research, tells us that “Those who divorce earlier in adulthood have more time to recoup the financial loses divorce usually entails.. “In contrast, those who divorce later have fewer years of working life remaining and may not be able to fully recover economically from a gray divorce.”.  A late-life divorce can wreak havoc on even the most well-thought out retirement plan.  Consequently, divorce in retirement is a time when resources are diminished; household income has dropped, assets and cash-flow have been reduced, and spouses may find themselves vulnerable. This is a serious planning concern.

Financial planning was important for retirement before the divorce, and it can be even more important now if you are considering or going through a divorce.  A planner specializing as a Certified Divorce Financial Analyst  (CDFA) can help you make the most of your retirement and manage these considerations:

Expectations & Education

During this time, managing expectations and financial education is paramount as income is typically limited and there is less time to replace needed retirement savings. This may be the first time a spouse must balance a budget, pay expenses, or manage a large cash settlement. One or both spouses may need to consider working longer (delaying retirement), modifying living expenses and discretionary spending.  Many times, one spouse may be entering the workforce – either again after many years or even for the first-time. Life will be different post-divorce; and the thought of this can be daunting and stressful and decisions tend to be made on emotions rather than facts. Ensure you have others in your life to help support you during this difficult time. Learn as much about your finances as possible and get educated on laws in your state.  Consider alternate divorce resolution models such as Mediation, maybe join a support group or yoga, be “mindful” of emotions,  and try to keep “healing” as a central theme as you weigh choices.


One of the most important decisions made during the divorce process concerns the identification and splitting of the assets. A few things to consider:

    • Are you in an equitable distribution or a community property state, and what does that mean for you and your spouse?
    • Which assets & debts are separate, marital or community?
    • Are the assets liquid – do you have or will  you need access to cash? 
    • Are asset division decisions being based on an “after tax” basis so you are comparing apples to apples when determining what is equitable?
    • Retirement splitting – Is a QDRO needed? A DRO? An MRO? If this is a divorce that involves a service member – Are you a 10/10/10 spouse? A 20/20/20 spouse? Do you need to file something with Defense Finance Accounting Service (DFAS) for the  survivor benefit program or continued healthcare?
    • Pension division involves many things to consider. Just a few include the availability of COLA benefits to the non-participant spouse, ensuring benefits for the surviving spouse if the employee spouse passes (before and after the employee spouse begins collecting benefits), ensuring proper pension valuation and agreement on parameters used. Does a pension “immediate offset” make more sense than receiving pension benefits?
    • What social security benefits are you entitled to as a divorced spouse? A divorced widow? How is your social security benefit impacted by the Windfall Elimination Provision (WEP).
    • Is your spouse agreeing to take over debt and can you still be held responsible for those debts if they don’t pay? What happens if they file for bankruptcy?
    • Are there things on the tax return like depreciation, long-term carryover losses, passive activity losses, or net operating loss from a business that need to be reviewed and negotiated?  Or are you taking over the rental property as your primary home after the divorce?
    • What changes will need to be made to Estate planning?  Will, Trust, Power of Attorney, Healthcare Proxy, Healthcare Directive, asset retitling, account transfers, QDRO execution.
    • How does credit law differ from divorce law?  How does tax law differ from divorce law?

Settlement Process

Perhaps one of the best ways to handle financial expectations & fears is to use a data driven approach to the divorce settlement process. While developing your settlement it is important  to understand the short & long term effects on cash flow, taxes and your net worth, 5, 10, 20+ years into the future, because what may seem fair or equal on the surface is not equitable many times when looked at from a longer range view.

Certified Divorce Financial Analysts incorporate retirement planning into the divorce process; focusing on cash flow, healthcare costs, taxes, real estate, & net worth. This kind of Divorce Planning analysis, like retirement planning, allows spouses to negotiate and make adjustments in the decision of division of property & go into the settlement with a clear picture of their post-divorce financial future. It creates an opportunity to set the stage for fair negotiations,  level set expectations, establish “post-divorce” life goals and create a plan that both spouses can take action within and live with.

Increase Cash flow

If reducing expenses & saving can improve the odds for retirement success, then not carrying a mortgage into retirement could help after a gray divorce when income sources are limited & healthcare costs are most likely higher. A reverse mortgage can be used as a strategy in gray divorce to assist in retirement planning.

Cash flow is usually a concern during and after divorce, as the resources earmarked to support one household are now supporting two, and filing single on taxes could reduce net income available for living expenses. A HECM reverse mortgage should be evaluated as a possible “tool” or option, for those homeowners over 62 (who have little to no mortgage obligation), as it can be used to generate cash to bridge a shortfall in a spending plan, allow the delay of claiming Social Security or help facilitate the purchase of a new home for one or both spouses. A reverse mortgage can even protect against sequence risk and declines in your portfolio (if you are drawing from here, you don’t need to sell in a down market to raise cash), has benefits over HELOC, or could be used as part of LTC planning to stretch retirement assets.


Other ways to manage this disruption, like in retirement planning, may include adjusting goals, expectations & time frames. This could look like working longer, delaying Social Security claiming, reducing expenses (for example: downsizing or moving), saving more or considering a Single Premium Immediate Annuity to create guaranteed income. See also “Divorce Mistakes That Can Cost You”.  With flexibility and a positive attitude this can be an opportunity to recreate the next chapter of your lives.

Remember, no “one” plan or option makes sense for everyone, but having the right professionals to consult with  can make a difference in your long-term financial outlook.  Both the IDFA (Institute for Divorce Financial Analysts) https://www.institutedfa.com/  and the ADFP  (Association of Divorce Financial Plannerswww.divorceandfinance.org/ can be resources for finding a CDFA™ (Certified Divorce Financial Analyst)  professional to support you during this time of transition. Consult a Certified Financial Planner for comprehensive advice on strategies that address your specific retirement planning needs; see www.CFP.net or www.oneconnect.net


By: Michelle Buonincontri, Certified Financial Planner, Certified Divorce Financial Analyst

[email protected]


We work throughout our entire adult lives and, during that time, most of us are required to pay into the Social Security System.  The payoff comes when we hit retirement age and are able to start receiving Social Security benefits.  But what happens when a person gets divorced?  “How will the divorce affect my Social Security?”  “Do I lose half of my benefits?”  “Am I entitled to my husband’s social security?”   These are questions I frequently hear from my clients.

The answer is that you do not lose half of your Social Security when you divorce — but after that, the matter can get complicated.  If you are widowed, then you may be entitled to social security payments as a survivor spouse.  If you are divorced (not widowed), and you are of retirement age, then you could be entitled to spousal benefits, or to your own benefits.  If you had multiple marriages, then you might have to choose between several different options.

I recently came across a Los Angeles Times article which sheds some light on the subject.  In the March, 2011 article, entitled Divorce can complicate Social Security claims; Knowing the rules involving spousal and survivor benefits can prevent costly errors,” author Kathy M. Kristof makes the following points:

“If you were married for at least 10 years to someone who paid into the Social Security system, you are entitled to a spousal benefit, even if you are divorced from that person.  Eligibility does not depend on whether or not you also worked and paid into the system.”

“Spousal benefits, if claimed at your full retirement age, usually amount to 50% of the wage earner’s full benefit.  If you claim benefits early, the amount you get is reduced.”

“If you worked for 10 years and paid into the Social Security system, you also may be entitled to benefits on your own work record.  In that case you must choose — you cannot claim both your own and spousal benefits.  You can, however, claim the one that gives you the most money.”

“If you remarry before age 60, you lose your ability to claim spousal or survivor benefits based on a former spouse . . . If you remarry after age 60, all of your rights to spousal and survivor benefits based on your former spouse’s record are retained for your lifetime.” 

“If you are single now but were married to more than one person for more than 10 years each, you may be eligible for spousal benefits based on the earnings records of each of those former spouses . .   You don’t get to add up all the benefits, of course, but you do get to choose the benefit that’s best.  So, if one spouse was an executive with maximum Social Security earnings, the next spouse was a low-wage earner, and the third worked in a job that didn’t earn Social Security credits, you can claim the benefit from the first spouse, which is likely to amount to the most money.”

“But what if spouse No. 2 died before you claimed Social Security benefits?  Then you would be entitled to spousal benefits on spouse No. 1 or survivor benefits on spouse No. 2.  Because survivor benefits are 100% of the working person’s entitlement and spousal benefits are just 50%, the survivor benefits may be more generous, even if spouse No. 2 didn’t earn as much.  You can claim the one that pays the most.”

Social Security is an important part of your long-term planning for retirement.  In the event of a divorce, you are given choices, but those choices aren’t always easy.  Having the assistance of a legal counselor and/or a financial expert can go a long way in helping you to properly plan for your future.

Gary Frank is a Family Law Attorney with over 30 years of experience in handling division of property, retirement assets, and all other matters arising out of divorce and/or legal separation.  If you are in need of a consultation, please do not hesitate to give us a call at 602-383-3610, or you can contact us by email: [email protected]; or through our website at /.

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