What is Grey Divorce? It’s a term used to describe a couple going through divorce after they have reached age 55. Grey Divorce is becoming more commonplace than ever before. The number of such divorces has doubled since 1990. Here are some surprising and important things to know when entering into a Grey Divorce that if ignored could lead to wasted money and/or additional legal challenges.
1) Not only will your wealth likely drop, but so will your standard of living.
In a recent study by Western and Southern Financial Group, nearly 60% of grey divorcees reported losing at least a quarter of their retirement savings, many of which lost more than ½.1 But that’s not the whole story, what’s perhaps more staggering is the impact on one’s standard of living. A man undergoing Grey Divorce can expect his standard of living to drop by 21% whereas a woman’s standard of living often drops by 45%.2 Proper planning and self-advocacy can help mitigate this risk as some of the most common regrets include not negotiating for a better settlement and misunderstanding how to divide retirement accounts. 2
2) Try not to access retirement funds before retirement.
Accessing retirement funds before reaching retirement is often one of the most expensive ways to access money. If you dip into your retirement plan and you’ve not reached age 59.5 you will likely have a 10% early withdrawal penalty assessed on withdrawal as well as income taxes. That is the immediate effect. But the long-term effect is exponential as the dollars you removed could have remained in the retirement account earning compounded, tax-deferred growth. For instance, if you are 52 years old and in the 22% federal tax bracket, a $10,000 net withdrawal will actually cost you $14,706 in order to cover the federal taxes and 10% early withdrawal penalty. That’s today’s impact. But the opportunity cost of that is even larger. Assuming that money would have earned a conservative 5% compounded, tax-deferred in a retirement account until age 65, it would have grown to $28,132. The difference between these two scenarios is a very meaningful $13,000+.
3) Budgeting isn’t as easy as cutting everything in ½
When thinking about what life will be like post-divorce, one might think their expenses will drop by half, but that’s not true. Yes, your meal costs and your car insurance premium may drop, but things like your heating bill, housing costs, and other insurance premiums remain the same. Many women who experienced Grey Divorce have taken on new debt within just 6 months of their divorce, citing one of the reasons being a lack of budgeting strategies and debt management planning. 2 Be sure to give proper attention to your budget and be sure that your final settlement is built on your actual needs.
4) Understanding not all assets are valued at their face value
Not all assets are valued the same once you account for additional factors such as penalty-free access, taxation, cost of upkeep, and growth potential. For instance, houses are expensive to maintain, and according to Zillow residential real estate has a long-term appreciation rate of 3.5% - 4.5% per year whereas the stock market’s long-term average is 10.42% - 11.71% per year.3 In this sense, a home valued at $500,000 and an investment account valued at $500,000 are not considered equal. Another example is Roth money vs. Traditional money. Withdrawals from Roth accounts after age 59.5 will not be taxed whereas all withdrawals from Traditional accounts will be fully taxed. Therefore a $500,000 Roth account is more valuable than a $500,000 Traditional account. Again, these two pieces of property are not the same.
5) It matters how assets are split
If possible, using a QDRO to split retirement assets is usually best. QDRO stands for Qualified Domestic Relations Order and it is a legal document that specifically states how assets will be divided. Most employer plans and pensions require a QDRO in order to split the asset. I’ve had people attempt to withdraw funds from their employer’s retirement plan so they could give the money directly to their ex. Don’t do this! If you withdraw the funds you’re responsible for paying the taxes (and any applicable penalties) and if the amount you’re giving away is more than the annual gift tax exclusion (for 2026 is $19,000) then you’ll trigger gift taxes. Using a QDRO is much better as it allows the assets to transfer without triggering an early withdrawal penalty (if done before age 59½) or income taxes to the original owner.
6) Length of marriage matters.
Divorcees from a 10+ year marriage can claim Social Security benefits based on the higher of either their benefit, based on their own work history, or 50% of their ex’s benefit at their Full Retirement Age (typically age 67). This can mean a significant difference in benefits for someone who was a lower-earning worker. And what’s more is, it doesn’t affect the higher-earning partner’s benefit in any way, nor will they have any awareness of what you’re doing. According to data from the Social Security Administration (SSA), in December 2024 approximately 466,000 people were collecting survivor benefits on their deceased ex-spouse’s earnings record, and of those 466,000 people, 96% percent were women.4 Should your ex predecease you after you’ve reached your Full Retirement Age (commonly known as your FRA, which is typically age 67), your benefit will rise from 50% of their benefit up to 100% of their benefit.
Note that your stake in their Social Security benefit remains the same even if your ex remarries. To qualify for benefits on an ex-spouse, you must be currently unmarried, at least age 62, and have been married for at least 10 years. That’s it. To claim Social Security benefits based on an ex-spouse you will need their Social Security number (or name, date of birth, and parents' names), your marriage certificate, and your final divorce decree.
7) Divorces cost money, don’t play cheap.
As is commonly known, divorce attorneys charge by the hour and many charge consultation fees. With the advent of AI one might think they can rely on chatbots like ChatGPT or others to help them through the divorce rather than spending money on hiring an attorney. The problem with that is that AI doesn’t understand human relationship nuances nor is it perfect. If an error is made, or there is a misunderstanding of the instructions, there will be a cost to pay in addition to having no recourse. Seeking out professional counsel is worth the additional cost. You might start by consulting with your financial advisor, especially one who specializes in divorce and retirement planning. Divorcees who have worked with such advisors have been found to be more likely to properly divide the assets and feel their time with their advisor helped cut down their costs in the long-run. Don’t be penny-wise and pound-foolish, as tempting as it is.
Grey Divorce is never simple, but going into it informed can make all the difference in protecting your future. The financial, legal, and lifestyle implications are too significant to leave to guesswork or cheap shortcuts. By surrounding yourself with qualified professionals who can guide you through each step, you give yourself the best chance at rebuilding stability and confidence on the other side. Knowledge isn’t just power here; it’s protection, clarity, and the foundation for your next chapter.
1 Longo, Tracey. “Grey Divorces are Ruining Retirement Plans Across US, Study Says”. 24 March 2026. FAOnline.com.
2 DeVise Daniel. “Helping Clients Survive Grey Divorce.” 5 Jan 2026. FinancialPlanning.com
3“100 year and 50 year averages to 2025”. 29 April 2026. Investguiding.com.
4 Markowitz, Andy and Phill Pruitt. “Can I Collect Social Security Survivor Benefits When My Ex-Spouse Dies?” 29 December 2025. AARP.org.