Make Finances a Top Priority When Going Through Gray Divorce

What is Gray Divorce

Divorce is a reality for a growing number of aging couples, a phenomenon commonly referred to as “gray divorce”. According to a study at Bowling Green State University, the divorce rate among adults ages 50 and older doubled between 1990 and 2021. Now, one in four Americans getting divorced is 50 or older. And the rate is even higher for those over 65, with one in five getting divorced. [1]

Divorce When Financially Dependent

Because people at this age have more significant assets at stake, gray divorces need to be thought out carefully with regards to finances and ensuring success for the future. At this stage it’s critical to do whatever it takes to put emotion on hold to organize your finances before, during, and after divorce. Focus on your future financial goals, as these decisions will likely affect the rest of your life, including retirement plans. There is only one chance during divorce to ensure your finances are in order, so organization requires full focus.

It is not unusual for one spouse to have more of an understanding of the family finances, and one spouse a lack of in-depth knowledge about family assets. It’s important to realize what you do, and do not know about your combined finances, and fill in any gaps there may be to ensure a fair settlement for yourself.

Working With a CDFA®

Even those with little or no financial experience can become financially savvy by asking the right questions and seeking help from professionals such as attorneys or financial advisors who specialize in divorce. Many choose to work with a Certified Divorce Financial Analyst® (CDFA®) throughout the process. A CDFA® can either act as an advisor to you and your divorce lawyer or as a mediator for both you and your spouse to find an equitable settlement.

Financial mistakes during divorce tend to happen when decisions are made emotionally, and not all consequences are considered. Working with a CDFA® can reduce these financial mistakes by taking an objective view of the financial situation.

As an example, you might be emotionally inclined by an offer to keep your family home. You need to keep in mind that the real value of that home after the mortgage balance could be far less than its assessed value. A home with a market value of $3 million but with a mortgage of $2 million, is really only worth $1 million to you. In addition, if you keep the home, you will need to consider whether you can afford to maintain it over time, factoring in mortgage payments, taxes, and other carrying costs. Alternatively, if you have decided to find a new place to live, you need to carefully consider whether your income and/or your settlement will be enough to maintain your desired lifestyle in that new location.

Here are some additional financial mistakes working with a CDFA® can avoid during divorce.

Financial Mistakes To Avoid When Going Through a Divorce

Underestimating Your Living Expenses

Most people know how much they are paid, but oftentimes don’t know exactly where their money goes each month. For those who are not employed and/or are not involved in financial decisions for the household, this problem is often amplified.

Knowing how much you need to maintain your current lifestyle will be crucial to negotiating the terms of your divorce settlement. Be sure to consider expenses you may have in the future that you don’t currently have, such as health insurance, which you might have had through your spouse’s work and may need to purchase independently post-divorce. When detailing expenses into the future, it is important to also take inflation into account. What something costs today (for example, college education) could be much more expensive in the future.

Retaining Illiquid Assets

In most divorces, one spouse keeps the primary residence and the other might get a corresponding amount in cash, retirement accounts, or other assets. A similar process can be used when a spouse or couple owns a business or significant investment portfolio. Although the split might be equal on paper at the time of the divorce, one spouse can be left with an asset (a house or business) that could be difficult to sell. In addition, if a divorce settlement drags on for months or years, your financial situation can suffer until you are able to get access to those assets.

Failure to Consider Taxes

Be careful to consider the implications of taxes on your divorce settlement. Keep in mind that you will be taxed on any alimony that you receive.

You should also be aware of the taxes and penalties assessed on distributions from retirement assets. If you receive a portion of a retirement account as part of a Qualified Domestic Relations Order (QDRO), you will be subject to a 20% withholding tax if you fail to roll that retirement money directly into an IRA or other retirement account. You must also have a QDRO in place to avoid an additional 10% penalty on distributions taken before age 59 ½. A QDRO details how you and your spouse will split qualified retirement accounts such as 401(k) or pension accounts.

You will also need to consider capital gains taxes on any appreciated assets. This could include selling a home that has appreciated significantly or an investment portfolio with stocks that were purchased at a much lower dollar amount than what they are worth today. Although liquid and easy to sell, highly appreciated investment assets may have significant future tax liabilities due to capital gains and have a much lower actual after-tax worth to you.

Steps To Prepare for Divorce After 50

Gather Background Information – Information is Power

Ideally, you should gather information about your finances before you or your spouse files for divorce. It can ultimately save you time and money because obtaining information or discovering hidden assets can sometimes become difficult later, resulting in potential added legal fees and stress.

You’ll want current records of your assets detailing what you and your spouse each own, together and separately. Although information on children, property, and assets is only required once a divorce case is filed, it’s much better to have it in advance, especially if your spouse is likely to take his or her documents when you separate.

Create a List of All Assets

Providing an inventory of your assets and other financial information is critical, not only so that you know what you have, but to help your attorney in negotiating items such as alimony, child support, and division of property in your settlement. See our Divorce Checklist at the bottom of this post for a list of all assets to provide documentation on.

Make sure you have all legal estate planning documents which include wills and trusts. You will also need tax information for you and your business if applicable. 

See the Divorce Checklist at the bottom of this post for all legal and tax documents to collect.

Identify Liabilities and Expenses

Your attorney will need information on your liabilities and living expenses in order to document your current standard of living and help you determine what it will be after your divorce. All of your liabilities and expenses will be taken into account when negotiating your settlement. Create in detail a list of all of your expenses and cash needs, these expenses should include anything you currently pay and anything you expect to have to pay in the future. Credit card and bank account statements are good resources to use to determine your historical recurring and occasional expenses.

While making this list, keep in mind that the income and assets that supported a single household will now be split to support the lifestyle for two households. When marriages end, living costs can easily double, as you will now need two homes plus the utilities, taxes, and maintenance attributable to each. By detailing your assets, liabilities, and expenses, and analyzing your spending habits, you and your professional advisors can craft the best possible settlement and help you set up a post-divorce financial plan to help ensure a secure future.

See the Divorce Checklist at the bottom of this post for all liabilities and expenses to account for.

How Do I Determine Where to File for Divorce?

In most situations, you will file for a divorce in the state in which you and/or your spouse live. If you and your spouse own property in different states or you live apart, you might be able to select the state in which to file. In those situations, you and your attorney should evaluate the respective states’ divorce laws to determine the best choice. Among the items to consider are:

  • The length of time it will take to grant a divorce
  • The age of majority used in determining how long a parent is required to pay child support (for some states it is 18 and others it is 21)
  • filing and procedural rules, which can vary significantly.

In addition, some states have requirements that limit options even if a couple has multiple homes or live in separate states. For example, some states require that child custody be determined by a court in the state in which the children live; other states require that decisions about property must be decided by a court in the state where the property is located. Divorce laws also vary concerning other matters such as how prenuptial agreements are handled and whether alimony is allowed.

If you do have a choice on where to file for divorce, it’s important to consult your attorney, and possibly a financial advisor, to ensure you make the best decision for your unique situation.

How Do I Move Forward With Divorce After 50

Once you have gathered all of the information that your attorney will need, you can start to consider the bigger picture questions. Initially, many people simply focus on the settlement itself and how much it should or could be. Instead, a lifestyle analysis is needed to identify the priorities that need to be covered.

Questions to consider as a part of this lifestyle analysis include:

  • What type of post-divorce lifestyle do you want and is it realistic based on your assets and likely settlement?
  • How much income will you need for the lifestyle you desire?
  • Where will you live?
  • If you have not worked outside the home, will you go back to work and if so, how much will you likely earn?
  • When will you want to retire or need to start tapping your savings?
  • Will you want or need to leave money to your children or grandchildren?
  • Will you want to donate to charitable or other organizations?

Your analysis should consider your current assets, both liquid and those that can’t be sold until later, along with current and future expenses. Examples of future expenses could be your next home, college tuition, weddings for your children, vehicles, and healthcare. You’ll also want to estimate your eventual Social Security benefits, potential inheritances, taxes, and inflation. All of this information can help you determine how much you’ll need to save, how much risk tolerance you can afford to take with your investments, and budget for how much you can spend on a monthly and annual basis.

A lifestyle analysis will consider both wants and needs, and how they fit into the life and lifestyle you desire. For example, you might choose to work and save over a longer period, or invest more aggressively, so that you might be able to afford to travel or spend on other “wants” in the long term, or you might choose to save less now, or select safer, lower-risk investments, and live a more frugal lifestyle later. These are decisions that have the potential to affect you, and possibly your children, for the rest of your life, and they require careful thought and deliberation.

By working with an advisor throughout the divorce, you will have a better understanding of your current and future financial status. An advisor can help you pursue your plan, make adjustments as needed, and in the long run, maintain financial independence and retire comfortably.

How To Ensure The Best Outcome in Divorce After 50

With complete information, your attorney should work to get an equitable settlement. Depending on the state, an equitable settlement does not necessarily mean equal amounts for both spouses. This is where it is critical for your attorney to aggressively negotiate to make sure your settlement fairly reflects the best opportunity for you to maintain your lifestyle. This includes making sure to secure a settlement that can generate the income you will need. It also means being careful not to accept a settlement that might lead to additional expenses that could be a drag on your finances and your future. For example, if your settlement includes highly appreciated stocks that will cause a large tax bill upon sale, or includes a home where the carrying costs are not reasonable for your post-divorce income, this could be detrimental to your future financial well-being. If possible, try to get payments upfront.

Securing Your Financial Life After Divorce

Do Not Overlook Financial and Estate Documents

It’s critical to make sure you have updated beneficiaries on insurance policies, wills, IRAs, retirement accounts, and similar documents after a divorce settlement. Failure to make changes can result in an ex-spouse inheriting assets that you intended to go to children, a new spouse, or another designated heir. It is especially important to have a Qualified Domestic Relations Order (QDRO) in place. As mentioned above, a QDRO will detail how you and your spouse will split qualified retirement accounts such as 401(k) or pension accounts. QDROs should be filed before the divorce is officially finalized because it will need to be approved by the retirement plan sponsor.

Make sure you protect a divorce settlement with insurance

Provisions in a divorce settlement such as child support, alimony, and college tuition are dependent on the ex-spouse’s ability to continue paying. You can stipulate that your ex-spouse is required to carry disability and life insurance as part of your settlement, to guarantee payment will continue in the event your spouse dies or becomes disabled. Another option is to be designated as the beneficiary on your ex-spouse’s retirement plan.

Don’t Forget About Inflation

Inflation can have dramatic long term effects on a settlement. For example, college education costs historically have increased at a rate of 6%. Assuming this trend continues, what may cost $40,000 today, could cost over $80,000 in 12 years. Be sure to work inflation into your settlement negotiations.

Remember You Could Be Entitled to Social Security

If a couple was married for 10 years or longer prior to divorce, a non-working or lower-earning spouse is entitled to a portion of his or her spouse’s social security benefits. These benefits do not impact the worker spouse’s social security payments.

Plan For the Long Term

Planning for your divorce settlement should include a post-divorce financial plan that considers your long term financial needs through retirement and beyond. Transitioning from one household to two will add expenses, while the total income supporting divorcing spouses may remain unchanged. You will need a realistic estimate of your financial resources to determine whether they match your long term needs and expectations. After you and your spouse are divorced, it is important for you to embrace the financial plan that helped to shape your settlement.

For some, post-divorce may be the first time they have managed their own money. An advisor can help execute a post-divorce financial plan and make adjustments as new circumstances and changes in assumptions require. In some cases, there may be a need to cut back on discretionary spending for entertainment or vacations, or the need to live in a smaller home. Working with a financial advisor who will help you define and set financial goals, will give you the confidence you need to manage money and build a comfortable future for yourself in your new life.

Divorce Checklist

The information you need to collect for a divorce can be broken into 3 main categories: assets, legal documentation, and liabilities/expenses. Here we have examples of what is included in each category so you can be sure you’re as prepared as possible with documentation for your divorce attorney.


Tangible assets

  • Homes – Primary, vacation, rental properties, etc.
  • Timeshares
  • Furniture
  • Electronics
  • Vehicles, boats, motorcycles, RVs
  • Art
  • Jewelry
  • Safety deposit box contents
  • Collectables
  • Valuable items from hobbies
  • Non-marital assets, or assets acquired or inherited before your marriage, that will not be included in a divorce settlement

Intangible assets

  • Bank accounts
  • Cash
  • Retirement accounts
  • Pension
  • Investment accounts
  • Employee benefits
  • Stock options
  • Insurance policies
    • Life
    • Health
    • Home
    • Vehicle
    • Umbrella
  • Estate planning documents
  • Wills 
  • POA
  • Trusts
  • Frequent flier miles
  • PTO
  • Deferred compensation

Legal Documentation

  • Tax returns past 5 years
  • Payroll statements/Pay stubs
  • Business tax returns
  • Business profits/losses
  • Liabilities
  • Living expenses
  • Mortgages
  • Lines of credit
  • Credit cards
  • Tax liabilities
  • Detail of business expenses

Personal Liabilities + Expenses

  • Mortgage
  • Lines of credit
  • Credit cards
  • Tax liabilities
  • Expenses
  • Cash needs
  • Mortgage/rent for current and future home
  • Utilities
  • insurance premiums for life, health, auto, home, or any other policies
  • Current or future tuition
  • Car payments
  • Gas
  • Car maintenance
  • Food
  • Clothes
  • Home maintenance
  • Memberships
  • Vacations
  • Dining out
  • Entertainment
  • Attorney fees

[1] Age Variation in the Divorce Rate, 1990 & 2021 ( –

Wealthspire Advisors LLC is a registered investment adviser and subsidiary company of NFP Corp.
Aviva Pinto

About Aviva Pinto, CDFA®, CDS®

Aviva Pinto, CDFA®, CDS is a managing director in our New York office.

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