When Kimberlee Davis got divorced from her husband of over 20 years in her early fifties, the financial and emotional consequences were akin to a “nuclear explosion” in her life. Having moved from the U.S. to England for her husband’s career, she had to cut all ties with her home of over a decade and head back to the States. She also needed to rebuild her career in finance after quitting to care for her three children. The divorce dragged on and on, costing both her and her ex-husband more money.
“That decision destroyed my economic life,” Davis, now 65, tells Fortune. “I was 54 years old. People were not clamoring to hire me.”
Problems piled up. Having lived abroad for so long, her credit in the U.S. was nonexistent, making it difficult to find housing on her own. Her lowest moment was asking her father to act as a guarantor so she could rent a house. And she had a difficult time finding work after decades out of the corporate world. Davis eventually landed a job at Morgan Stanley, and is now a financial advisor and author. Despite earning good money, she is still playing catch-up with her retirement savings.
Davis’s story exemplifies some of the perils of “gray divorce,” which describes spouses separating after age 50. While overall divorce rates in the U.S. have fallen over the past 20 years, they have actually increased for older couples. Currently, almost 40% of those getting divorced are 50 or older. Since the 1990s, gray divorce has doubled, according to the Pew Research Center. For those over 65, the divorce rate has tripled.
Divorce at any age will lead to emotional and financial fallout, but it can be particularly devastating to older Americans. Not only is the process likely to be more complicated because of decades of accruing assets together, but each spouse has far less time to rebuild their finances before retirement, particularly investments. The financial implications are huge.
“You’re looking at much more complex finances. They could own businesses; stock needs to be divided,” says Kelly Mould, senior vice president and financial advisor at Johnson Financial Group. “We’ve seen an increase in hidden assets.”
There are any number of reasons couples divorce later in life, says Mould. Many clients wait until their kids are grown and out of the house to separate. For others, retirement can bring long-simmering resentments to a head once spouses are spending significantly more time together. Divorce is also far more socially acceptable than it used to be. Whatever the reason, both spouses suffer.
For older couples, the splitting of retirement accounts—401(k)s, IRAs, pensions, and so on—can be a messy and expensive financial hit. This is in part because the way 401(k)s and pension plans are split is governed by a qualified domestic relations order (QDRO), while IRAs are distributed depending on if they were opened before the marriage or during.
Additionally, the partner who had a lower-paying job or wasn’t working outside the home may see their Social Security benefits slashed, depending on how long they were married. The sale of assets, including the home, cars, etc., can also be costly. And one spouse may owe the other alimony.
‘You’ll start over’
The financial effects are especially pronounced for older women, research shows. Generally speaking, women in heterosexual marriages are more likely than men to drop out of the workforce in their prime earning years to care for children, putting them at a disadvantage in the divorce proceedings and after the split is finalized. Often, they must try to reenter the labor force for the first time in years or even decades.
All older adults who live alone are much less likely to describe their financial situation favorably, according to Pew. But 19% of older women who lived alone were in poverty in 2014, compared to 15% of men. And women 50 and older experience a 45% decline in their standard of living postdivorce, compared to 21% for men, a 2021 study from The Journals of Gerontology found.
Of course men, too, suffer from gray divorces. Older men who live alone “are considerably more likely to experience social isolation than women who live alone,” per Pew. Mould says this tracks. Anecdotally, she says, male clients aren’t always as adept at keeping up with their families and friends postdivorce as women often are, particularly if they remarry. But on the whole, the financial fallout is far less severe, the research finds.
There are a number of ways to ease the process, for both men and women. Mould encourages both spouses to have their own financial advisor and lawyer to advocate for them. Davis advises both partners to be on top of their finances throughout the marriage. Even if only one spouse works outside the home for pay, both should have knowledge of all of the assets and accounts. Davis also encourages couples to get prenuptial agreements that outline what one spouse is entitled to financially if they give up their career to be the family caretaker.
Despite the years of strain, Davis says there’s a light at the end of the tunnel—the light that sparked the initial fuse to end her first marriage. She upgraded from renter to homeowner a few years ago, got remarried, and even bought herself a race car. Her career is thriving, and she feels fulfilled with what she has built post-split.
“You’ll start over. Maybe you’ll have to live on a tighter budget, but the freedom and the chance to go self-realize and live the life you wanted is worth more than any financial stress,” she says. “It was in some ways the best thing that could have happened to me in my fifties.”
This story was originally featured on Fortune.com
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