Gray divorce, or the dissolution of marriages among those 50 and older, brings with it significant financial consequences that can disproportionately affect the standard of living for both men and women. However, women often experience a more substantial decline in their standard of living post-divorce compared to men.
Understanding the factors contributing to this gender disparity sheds light on the complex financial implications of gray divorce for individuals entering their later years.
Economic disparities post-divorce
Gray divorce introduces a range of economic challenges for both genders. However, women, on average, face more of a decline in their standard of living after the dissolution of marriage. A common contributing factor is the persistent gender pay gap that spans many women’s careers. With lower lifetime earnings compared to their male counterparts, women entering divorce may have fewer financial resources to rely on. This often sets the stage for a more challenging financial transition.
Asset division and wealth disparities
The division of assets plays a key role in determining the post-divorce financial landscape. Traditional gender roles often result in women managing household responsibilities while their spouses handle financial matters. Consequently, women may be less knowledgeable about their marital finances, leaving them with fewer assets post-divorce. The distribution of retirement accounts, real estate and other assets helps determine the standard of living each party can maintain.
Retirement and Social Security impacts
For women in a gray divorce scenario, the consequences extend into their retirement years. A division of retirement savings, coupled with the challenges of reentering the workforce later in life, may lead to diminished retirement funds. Women may, too, may face limitations in claiming Social Security benefits based on their ex-spouse’s earnings. This can further affect financial stability in retirement.
According to Kiplinger, the average woman sees her standard of living decline by 45% after a divorce. Men, on the other hand, see their standards of living decline by about 21%. Recognizing and addressing the economic challenges faced by women after gray divorce helps foster financial resilience. It also helps ensure a more equitable transition into the later stages of life for both genders.
