Golden Bachelor Wedding Sparks Conversations About Gray Divorce And Its Financial Consequences

On Jan. 4, 2023, 72-year-old widower Gerry Turner and star of ABC’s “The Golden Bachelor” married 70-year-old widow Theresa Nist. Turner and Nist met on the show, filmed over four weeks in August. Nist beat out 21 other women, including finalist and two-time divorcée Leslie Fhima.

Late-in-life marriages—and divorces—are happening more often. The latter is sometimes referred to as gray divorce, a term coined by the American Association of Retired Persons (AARP) to define divorces that occur after age 50.

An analysis of divorce data from 1990 to 2021 released by Bowling Green State University’s National Center for Family and Marriage Research found that divorce rates for those aged 45 and over rose during that period, while rates dropped for those younger than 45. Boomers—those born between 1946 and 1964—reported a higher divorce rate than any other generation. The most significant increase in divorce rates was among people 65 and older—the rate tripled from 1990 to 2021 (the divorce rate for the U.S. population over 50 doubled in those two decades). That works out to a whopping one in four divorces involving those who are age 65 or older.​​

Reasons

It’s a trend that California divorce attorney Holly J. Moore has observed firsthand. As a certified family law specialist with over 15 years of experience in family law, Moore has represented clients from all walks of life, including many seniors.

“It has to do with several different dynamics at play,” Moore says. “First, this is usually around the time when couples become empty nesters. Some couples stayed together ‘for the kids’ and now feel like they have the freedom to split. Others thought their marriage was still intact only to find out that without the chaos of raising children, they don’t like each other that much anymore.’”

Moore notes another factor skewing the numbers: you have to be married to get divorced. Says Moore: “Another dynamic at play is that this (boomer) generation married more than younger generations, so the numbers are simply more significant. As well as it is becoming more and more socially acceptable to divorce.”

That tracks with the findings from Bowling Green State University’s Susan Brown, who noted that marriage at a young age is a risk factor for divorce.

One additional factor? We’re living longer. The average life expectancy in the U.S. in 2024 is 79.25 years. That’s more than ten years longer than the expected life span in the 1950s. Living longer may encourage Boomers to consider how they want to spend those years.

Moore calls that the “mid-life crisis” we often talk about. “Around middle age, you have likely done some growth and evolving,” she says. “If your partner has evolved differently or hasn’t grown, this is when we hear how people have grown apart.”

Issues

Just as the reasons for a gray divorce may differ from those of younger generations, so do the issues.

Generally, they don’t have custody issues, notes Moore. Instead, finances take center stage—the couple has less time to rebuild net worth/assets before retirement or old age. “This makes the financial implications more severe and scarier,” she says, “especially if you are a person with a lower earning capacity.”

Mitigation

One way to mitigate financial issues at divorce is to sign a prenup before marriage. This is especially true with subsequent marriages since, according to Brown, remarriages have a 2.5 times greater risk of divorce than first marriages.

And while recent divorcees may declare, “I’m never getting married again,” Moore says, “You will.” And, she adds, “Please do a prenup.”

Movies may suggest that prenups are only for the super rich, but that’s not true. A prenup, says Moore, is simply an agreement between soon-to-be spouses executed before marriage about how assets, debts, and income will be characterized during the marriage and how it will be divided upon divorce. Generally, the division, as well as how any support might be paid out, will be different from the default in state law.

If you’re already married, you can still sign a similar agreement. If you enter into the contract after marriage, it’s referred to as a post-nup.

Complications

A gray divorce can be straightforward, says Moore, since technically, the parties could have been married for a year—gray divorce refers to the parties’ ages at the time of the divorce and not the length of the marriage. That means that gray divorce isn’t automatically more complex.

However, finances can sometimes be more complex if the parties have been married for 20-30 years. Older couples, especially those who have stayed together for many years, tend to have more assets, which could make division more complicated.

The kinds of assets can come into play, too. Small businesses, digital assets, and real estate can be tricky—and expensive—to liquidate or divide. Buying the other spouse out may not be a realistic option, depending on the type of asset and even if you can afford to write the check, you don’t want to be left cash-poor. Plus, selling or moving from the marital home can impact the ability to deduct home mortgage interest on your taxes and other real estate benefits, like the capital gains exclusion. And deferred gain on assets like small businesses and digital assets will typically have to be realized when sold or transferred, resulting in a tax bill.

Also complicated? Retirement assets. Missteps in division can result in negative consequences. Most retirement plans require a Qualified Domestic Relations Order, sometimes called a QDRO, to be filed before the plan can pay any retirement plan benefits to an ex-spouse. Without some planning, that can also pack a tax punch.

The parties will often opt for an eligible rollover distribution under a QDRO. That allows a plan participant’s spouse or former spouse to roll their share of the plan tax-free into an IRA or another qualified retirement plan. The safest way to accomplish this? A direct, or administrator to administrator, rollover.

In other cases, such as when liquid assets are stretched, benefits like spousal or child support may be paid out under a QDRO to a former spouse. It could also be the case that the ex-spouse simply wants the funds paid outside of a retirement account to pay down debt or meet expenses. If a QDRO benefit is withdrawn or transferred to a non-IRA account, those funds will be considered a taxable distribution. Fortunately, there is a bit of a breather for some since assets distributed pursuant to a QDRO are exempt from the 10% penalty that normally applies to early withdrawals (that wouldn’t likely impact those in a gray divorce, however, since the penalty only applies to amounts an individual withdraws from an IRA or retirement plan before reaching age 59½).

And don’t forget about Social Security. Even if your spouse has never worked, they may be eligible for Social Security benefits if they are at least 62 years of age and the other spouse is receiving retirement or disability benefits. This doesn’t really change with a divorce. If you are divorced and you are entitled to benefits, your ex-spouse can also receive benefits based on your work record (even if you have remarried) if you were married at least ten years, and your ex-spouse is unmarried and age 62 or older.

Typically, if you have not applied for retirement benefits, but can qualify for them, your ex-spouse can receive benefits on your record if you have been divorced for at least two continuous years. If your ex-spouse is eligible for retirement benefits on their own record, Social Security will pay that amount first and pay any additional amount based on your record so that the combination equals that higher amount.

Older adults who have reached full retirement age can choose to receive the divorced spouse’s benefit and delay receiving their own retirement benefit. But then, it gets tricky—if your ex-spouse’s birthday is January 2, 1954 or later, the option to take only one benefit at full retirement age no longer exists, so that if your ex-spouse files for one benefit, they will be effectively filing for all retirement or spousal benefits.

And just as there are assets and sources of income which may be tapped in a divorce, there could also be debts that need to be paid (such as mortgages and business lines of credit). How those are treated could have significant financial and tax consequences, especially if one spouse has been out of the workforce for any period.

Identifying the assets and debts acquired during a marriage is key when negotiating a divorce—and where a forensic accountant could come in handy. (See my previous article here.)

Support

The marriage’s length and the parties’ age could also have implications for spousal support. Typically, the longer the marriage, the longer the support. For example, in California, where Moore practices, the court cannot put an end date on support if a marriage lasts over ten years.

The impact of age can vary. For example, if both parties are at retirement age, Moore says the court would be less likely to saddle one person with a hefty support obligation.

And while money can be useful, other means of support can be more concerning—like health insurance and health care costs. This is particularly true if only one spouse was working and the other was covered under the working spouse’s health insurance plan. A divorce could mean a loss of benefits and higher premiums moving forward when medical costs could be steadily rising.

On the tax side, in the world after the 2017 Tax Cuts and Jobs Act, those who must pay alimony can typically no longer deduct those payments on their taxes—and those who receive alimony do not have to include it in their taxable income. Child support payments, however, remain tax-neutral. That means they are not included in taxable income or deductible on your taxes.

Professional Help

With so many factors to consider, consulting with a knowledgeable divorce attorney is a good idea. Ask around for referrals and arrange for a consultation before you make a decision. Ideally, you’ll work with someone who has the same core values as you and who understands your goals and interests.

And while many potential divorcees automatically assume they need a pit bull divorce lawyer, Moore warns that you don’t need an aggressive attorney for the sake of having an aggressive lawyer. Sometimes, she says, you need a hammer. Sometimes, you need a saw. And other times, you need a screwdriver. She says if you pick the wrong tool, “you’re going to cause some damage.”

MORE FROM FORBESSo You’re Getting A Divorce: Do You Need A Forensic Accountant?By Kelly Phillips Erb