As the rate of “grey divorces” rises among baby boomers, the financial impact on their retirement is becoming more apparent. Late-in-life separations not only affect immediate finances but can also derail long-term retirement plans, leaving many unprepared to live comfortably in their later years. For women, these financial setbacks are often more severe, leading to substantial asset losses in divorce settlements that diminish their retirement security.
A Financially Shattered Retirement Dream
Libby Mintzer, a 73-year-old former paralegal, illustrates the stark reality many boomers face post-divorce. Mintzer spent her career ensuring financial security for her future, imagining retirement as a time of peace and enjoyment with her husband. Yet, her dreams were shattered by divorce, leaving her struggling to live independently on limited savings. As Mintzer shared with Business Insider, she now survives on $1,600 in monthly Social Security benefits with no spousal support. After spending her 401(k) on her ex-husband’s business, Mintzer’s financial stability was further compromised, and she warns other women, “I always thought of everybody else before me… Don’t do it.”
While Mintzer received $200,000 from her divorce settlement, she quickly spent it on a small apartment, renovating it to accommodate her needs. Yet even with these adjustments, she struggles to keep up with homeowners association fees and faces ongoing financial challenges as the primary earner adjusting to a fixed income. Unable to supplement her income through part-time work, Mintzer finds her credit cards maxed out on essentials, leaving her in a precarious financial position in retirement.
Divorcees Face Greater Retirement Challenges Than Married Couples
Divorce significantly impacts financial security, particularly for baby boomers entering retirement. According to the Social Security Administration, the average monthly Social Security benefit in January 2024 was $1,907, although it can be as high as $4,873 for those who delay claiming until age 70. For many divorcees, however, early retirements due to financial strain or health concerns mean they rely on lower benefits, insufficient to meet rising living and housing costs.
The increasing prevalence of late-life divorces, as highlighted in a 2022 study published in the Journal of Gerontology, further compounds these challenges. Between 1970 and 2019, the divorce rate per 1,000 individuals rose from 4.85 to 12.72, marking a growing trend of older adults facing prolonged financial impacts due to divorce. According to Census Bureau data analysed in 2023, divorcees generally have less in savings, 401(k) balances, and monthly income compared to married individuals, leaving them financially strained in retirement.
Shared Assets and Divided Futures
Married couples often enjoy higher retirement savings due to combined incomes and shared assets, including properties and investments. However, these assets are frequently split in divorce, significantly reducing each individual’s financial cushion. Wealth management advisor Melody Evans explains that married retirees typically have over $100,000 more in their 401(k) accounts than divorced retirees, largely due to asset division during settlements. Divorced individuals have an average monthly retirement income of $1,940, as found by Business Insider, which is notably lower than their married counterparts and those who are widowed or never married.
Evans advises couples to consider prenuptial agreements to help clarify asset division before marriage. However, these agreements can only protect pre-marital assets, leaving wealth acquired during the marriage vulnerable. Evans emphasises the importance of understanding joint assets and accounts like Social Security, Roth IRAs, and employer-sponsored retirement plans, as these can be strategically divided based on each partner’s income and expenses during retirement.
Women Bear the Heavier Financial Burden
In the aftermath of divorce, women face unique challenges, often bearing a more significant financial burden than their male counterparts. Evans notes that women are more likely to be excluded from the financial management of the household, which can leave them vulnerable during divorce proceedings. “When I hear about people having a really hard time or feeling like they missed assets during a divorce, generally, it’s because they were not fully aware of what assets the couple had,” Evans says.
The financial disparity is especially stark for boomer women who, unlike men, lacked access to credit cards before the 1970s and often spent years outside the workforce managing households. This has contributed to a persistent income gap, making women more susceptible to financial instability post-divorce. Retired men, for example, earn an average monthly income of $2,610, while retired women receive just $2,042, according to recent data. Additionally, men have an average of $318,727 saved in retirement accounts, compared to $239,706 for women, further highlighting the financial divide.
Custody and Financial Strain on Divorced Women
The financial situation can be even more challenging for women who assume primary custody of children post-divorce. Kathryn Clark, an 80-year-old retiree, illustrates this reality. Clark, who divorced in her 50s after three decades of marriage, became the sole provider for her sons. With limited retirement savings, Clark faced years of financial strain, ultimately relying on low-income housing and living on minimal Social Security benefits. When her ex-husband passed away, her Social Security increased slightly due to survivor benefits, but she continues to live on a tight budget, struggling to meet basic needs. Clark’s story, according to Business Insider, underscores the difficulties many divorced women face in balancing financial responsibilities with limited income in retirement.
The Urgency of Financial Independence
Mintzer and Clark’s stories highlight the importance of financial independence for women at all stages of life. Divorce can result in a sudden loss of assets and income, and those without independent savings may find themselves financially compromised. Mintzer offers a piece of advice to younger women: “Don’t rely on someone else—whether it’s a husband, wife, or children. From the day you turn 18 and start working, start preparing for that day when you’re not going to be working anymore.”
