Gray Divorce Can Throw Your Retirement a Curveball: What to Know

A mature woman looks unhappy as she looks out the window while an older man reads behind her.

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published 17 September 2025

More and more, couples are splitting up after or near retirement. However, when a couple divorces, it isn't as simple as, "You go your way, and I'll go mine." This is especially true when a decades-long union ends.

The divorce rate among adults 65 and older is rising, even as the national rate of divorce had declined slightly. These later-in-life divorces are often called "gray divorce."

Adults 65 and older represent the only age group with an increasing divorce rate. Later in life, couples may realize they have grown apart and have differing views of what retirement looks like that may lead to divorce.

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With couples typically preparing for retirement as a unit, gray divorce presents unique financial challenges. The couple isn't the only thing splitting up. The assets must be divided up, too.

Risk of depleting retirement assets

When a couple is planning for retirement together, they are assuming they will share many costs of living, such as housing.

But, after a divorce, those costs can increase greatly to fund two separate lives. That can leave divorced retirees at risk of depleting their retirement assets faster than anticipated.

What makes gray divorce even trickier is that the individuals don't have the time to rebuild retirement savings on their own.

What's more, among Americans who have gone through divorce, 2 in 5 (40%) said it derailed their financial retirement strategy in the 2025 Annual Retirement Study* from the Allianz Center for the Future of Retirement, part of Allianz Life Insurance Co. of North America (Allianz Life). Rebuilding a financial retirement strategy can be a tough task.

A divorce later in life could mean needing to delay retirement to accumulate more savings and to consider additional risk-management strategies to ensure that funds can last a lifetime.

About 1 in 3 divorced Americans (34%) said getting a divorce set their retirement plans back. And the majority of divorced Americans (54%) said that they have substantially more financial responsibilities after their divorce.

Your retirement assets don't belong to you

You may think that because an account is in a person's name, they alone have access to it and will retain it after the divorce. This is especially important for retirement savings accounts.

Anything acquired during the marriage is usually considered marital property, no matter which spouse owns it or how it is titled. This can be especially important for retirement savings.

Some retirement savings plans require specific actions in order to establish legal rights to the funds. A qualified domestic relations order is required when dealing with qualified retirement plan funds, such as a 401(k) or a pension, in a divorce.

This can establish the legal right to receive a designated percentage or dollar amount of an ex-spouse's qualified plan account balance or benefit payments.

These orders apply only to tax-qualified plans and do not apply to military or government pensions.

Meanwhile, individual retirement accounts (IRAs) can be fairly simple to divide during a divorce. But the difficult part is determining how to split up accumulated retirement savings and investments.

Transferring funds from an IRA can create a tax bill down the road, so it is important to consult with a tax and/or legal professional about how best to divide the funds.

Social Security benefits are a cornerstone of retirement strategy. When a couple divorces, Social Security benefits are not divided. But an ex-spouse can claim spousal benefits through the Social Security Administration.

Most couples have a higher wage earner and a lower wage earner. One spouse may have opted out or reduced their time working during their marriage. This results in lower lifetime earnings and lower benefits through Social Security.

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An ex-spouse with a lower Social Security benefit can file to receive benefits based on either their own work record or their former spouse's work record.

The claiming ex-spouse would receive benefits based on whichever benefit is greater but cannot claim both.

There are requirements to be eligible for spousal benefits, including having been married for at least 10 years.

A tax and/or legal professional can help determine whether you are eligible for spousal benefits and how they would fit into a retirement strategy.

A simple rule for marital assets

It's not romantic, but there are some ways to help ease a divorce by documenting assets while still married. A simple rule for marital assets is to categorize them as mine, yours and ours.

Documenting assets now or prior to considering a divorce can help ease unpleasant issues later — if you can agree on what is mine, yours and ours now.

You must also consider that rules vary among states, so get some legal help and advice when drafting your agreement and when you change state residency.

A gray divorce has the potential to derail a retirement strategy as assets are divided and the cost of living separately increases.

Proactive measures such as documenting assets and seeking legal and tax professional guidance can help address the risk of divorce later on.

With the increasing prevalence of gray divorce, securing your retirement requires careful preparation now so you are prepared for any changes later in life.

* Allianz Center for the Future of Retirement conducted an online survey, the 2025 Annual Retirement Study in January/February 2025 with a nationally representative sample of 1,000 respondents age 25+ in the contiguous U.S. with an annual household income of $50k+ (single) / $75k+ (married/partnered) OR investable assets of $150k+. The study also included an additional sample of respondents who identified as Divorced (166).

The Allianz Center for the Future for Retirement produces insights and research as a part of Allianz Life Insurance Company of North America.

This content is for general educational purposes only. It is not intended to provide fiduciary, tax or legal advice and cannot be used to avoid tax penalties or to promote, market or recommend any tax plan or arrangement. Please note that Allianz Life Insurance Co. of North America, its affiliated companies and their representatives and employees do not give fiduciary, tax or legal advice or advice related to Social Security or Medicare. Clients are encouraged to consult their tax adviser or attorney, or Social Security Administration (SSA) office, for their particular situation.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Kelly LaVigne is vice president of advanced markets for Allianz Life Insurance Co., where he is responsible for the development of programs that assist financial professionals in serving clients with retirement, estate planning and tax-related strategies.