Grey divorce: How to protect your nest egg

When Al and Tipper Gore announced their divorce in 2010 after 40 years of marriage, they did more than shock most Americans. They also sparked new research out of Ohio's Bowling Green State University into the state of marital union among older couples. Mr. Gore might be a poster boy for environmentalism, but his split at age 62 (she was 61) has also made him a symbol of so-called "grey divorce".

"It made me wonder how common is it for people who've been married for such a long time, like the Gores had, before they decide to call it quits?" asks sociology professor Susan L. Brown on the line from her office. "The popular notion is that older people don't get divorced, and we know that the rate of divorce declines with marital duration. But we were stunned to find that for those over age 50, the risk of divorce today has doubled from 20 years ago."

In their study, called "The Gray Divorce Revolution: Rising Divorce among Middle-aged and Older Adults, 1990-2009", Brown and colleague I-Fen Lin also reported that in 1990, fewer than one in 10 people who got divorced that year were over 50. But now, one in four people getting divorced is over age 50.

More than 600,000 people aged 50 and older got divorced in 2009 in the U.S., and the trend is likely to be very similar in Canada. Although the study didn't investigate causes or consequences of divorce, Brown says that it proves that the stigma of divorce has decreased across all age groups, including seniors.

"Even among older adults who we might think would be more traditional or conservative, many are taking stock of their relationships," says Brown, who's also codirector of the university's National Center for Family and Marriage Research.

"Some of the factors could be broader changes in society with rising female labour force participation and changing expectations for what constitutes a good marriage. Couple that with lengthening life expectancy, and you might have a 60-year-old who's retiring and thinking, 'Do I really want to live another 20 or more years with this person? Maybe I've had enough.'"

The financial implications of divorce later in life can be huge.

"We know that divorce is a huge life stressor, and people who are older in a unique financial position," Brown notes. "Their ship has sailed, so to speak. They've already had their years where they can amass their financial resources, so for many of them they can't go back to work and play catch up; they just have what they have. For people who are economically insecure or disadvantaged divorced could be quite devastating.

Ensuring post-divorce financial stability for the short and long-term is crucial, according to certified divorce financial analyst Jeffrey A. Landers, president of New York—based Bedrock Divorce Advisors LLC, a divorce financial strategy firm that works exclusively with women going through or contemplating a financially complicated divorce.

He says it's possible to survive grey divorce with finances intact, providing people take a few smart steps — beginning when they're still married, starting by keeping in mind the firm's motto: "think financially, not emotionally".

Maintain financial independence throughout marriage.

"When it comes to divorce, the best defence is a good offence," Landers says. "It's essential that you keep a separate bank account, establish credit in your own name, and maintain access to all marital money. Be an active participant in your family finances."

Divide retirement funds and pension plans carefully.

Even though laws differ between Canada and the United States, Landers emphasizes that divorce calls for a detailed examination of retirement accounts.

"Make sure you fully understand your share of these assets and how those funds will be transferred and that all the details are clearly spelled out in your divorce settlement agreement," Landers says.

Look into various types of insurance.

"Most women are aware that they'll need to provide for their own health insurance after divorce, but many neglect to consider other types of insurance, such as life, property, disability, and long-term-care," Landers says. "Once you're single, these types of insurance become more important than ever."

When it comes to life insurance, be sure to read the fine print if you receive child-support or alimony payments, he notes, so that you're protected financially if something happens to the ex-spouse.

"This is much easier to accomplish during divorce negotiations, rather than after a settlement is finalized."

Change your beneficiary on all your accounts.

Divorce requires careful estate planning, especially if kids are involved, Landers emphasizes.

"As remarkable as it sounds, in some cases, when a woman has failed to plan and then dies, an ex-husband might gain control of her assets," he cautions. "This step is often inadvertently overlooked."

Use a budget and live within your means.

Anyone going through divorce needs to create and stick to a budget.

Landers suggests speaking to a financial planner or advisor who specializes in divorce to get a sense of what adjustments you need to make to achieve or maintain financial stability.

In some cases, divorcees will need to find ways to cut living and lifestyle expenses, get a job or even take on a second one, or take other steps to make ends meet.