Divorces hurt finances, health for people over 50

In one sense, Amazon.com founder Jeff Bezos and his ex-wife, MacKenzie Bezos, are nothing special.

By finalizing their divorce this month, they join the millions now splitting up in middle age. The rate of divorce after age 50 has doubled in the U.S. since 1990.

The billionaire exes are unique, though, in escaping divorce with their finances relatively unscathed. He’s still the world’s richest person, worth $123.1 billion, and she has a $39.7 billion fortune, according to the Bloomberg Billionaires Index. Amazon shares climbed 19 per cent since they announced the end of their 25-year marriage in January.

There are few things more devastating than divorce. Even the very wealthy can find it financially draining, emotionally harrowing and just plain messy. Academic studies document serious health effects. A 2009 paper noted that recently separated or divorced adults have higher resting blood pressure. Last year, a German study found “divorce led to considerable weight gain over time, especially in men.”

Splitting up after age 50 – often called “gray divorce” – may be particularly hazardous to your emotional and financial health, far worse than doing so at younger ages. A wave of new research is quantifying the damage.

“It’s a grim picture,” said Susan Brown, a Bowling Green State University sociology professor and co-director of the National Center for Family & Marriage Research, which has generated many of the new findings. According to one study, people who’ve gone through a gray divorce report higher levels of depression than those whose spouses died.

The economic effects are even more stark. As more and more Baby Boomers end marriages, sometimes for the second or third time, they’re wrecking their finances on an unprecedented scale.

“Getting a gray divorce is a major financial shock,” Brown said.

If you get divorced after age 50, expect your wealth to drop by about 50 per cent, Brown and her colleagues found in yetto-be-published research that analyzed a long-running longitudinal survey of 20,000 Americans born before 1960. That’s not really a surprise: after all, any divorce involves dividing a family’s resources.

But incomes also collapse after a gray divorce, particularly for women. The researchers looked at standard of living – income adjusted for household size – reflecting the fact that a solo adult needs less income than a single parent with two children still at home. They found that when women divorce after age 50, standard of living plunges 45 per cent. That’s about double the decline found in previous research on younger divorced women.

Older men see their standard of living drop 21 per cent after a divorce. Previous studies have found a small or negligible effect of divorce on younger men’s incomes.

Even more troubling is that older people aren’t bouncing back from these financial shocks. Brown and her colleagues were able to follow survey respondents’ finances for up to a decade post-divorce.

“There is no appreciable recovery on the wealth front,” she said. “There’s no appreciable recovery in standard of living.”

Late in their careers, older people simply don’t have time to undo the financial destruction that a divorce causes. Women who spent years at home caring for children find it difficult to re-enter the workforce.