Divorce can be incredibly tough, but it can also create amazing new opportunities. The key is understanding what’s best for your personal and financial future.
Imagine Karen, a 52-year-old executive earning roughly $200,000 a year. After a 25-year marriage, she finalized her divorce and walked away with about $2.4 million in total assets — including retirement accounts, a brokerage portfolio, $40,000 in cash and more than $500,000 in stock from her former employer.
Her two children are grown. She rents a two-bedroom apartment. She’s maxing out her 401(k). She expects that, between a small pension and Social Security, she could receive around $5,800 a month in fixed income in retirement.
On paper, she appears financially secure.
But here’s the kicker: she wants to protect her wealth for the long term, while also enjoying this next chapter with confidence rather than guilt.
Karen’s situation is hypothetical, but the crossroads are very real. So-called ‘gray divorce’ has risen sharply in recent decades.
According to the National Center for Family & Marriage Research, the divorce rate for adults age 50 and older roughly doubled between 1990 and 2010 (1). Research from Purdue University has reported that in 2022, about 15% of divorces involved adults age 65 and older (2).
That means more Americans are dividing assets during peak earning years, often with just 10-15 years before retirement.
For someone in midlife, like Karen, poor investment decisions, an overly aggressive spending plan, or failure to update legal documents can derail decades of careful saving.
As Certified Divorce Financial Analyst (CDFA) Laurie Itkin puts it, one of the classic errors wealthy divorcees make is “assuming your money will last for the rest of your life” simply because the dollar figure looks large (3).
“Those without any knowledge of investing assume they can leave hundreds of thousands of dollars in the bank as a safety net, which they can pull from when they need cash. These people are often scared to invest their money … because they worry about historical market crashes … However, fear is not a plan,” Itkin asserts (3).
