The Graying Of Divorce In New Jersey: Challenges, Costs & Key Financial Impacts

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Divorce at any age is emotionally and financially stressful. But for couples in their 50s, 60s, and beyond — a group increasingly referred to as “gray divorce” — the stakes are particularly high. Unlike younger divorcing couples, individuals who divorce later in life often have less time to rebuild assets, are closer to retirement age, and must balance complex issues involving retirement income, healthcare coverage, pensions, and federal benefits systems that were never designed with divorce in mind.

In New Jersey, where the cost of living is among the highest in the country, the financial implications of gray divorce can be especially pronounced. This article explores why gray divorce is on the rise, how Social Security, Medicare, inflation, and financial planning influence the outcome, and how federal and state legislation shape the rights and responsibilities of older divorcees.

What Is Gray Divorce–And Why Is It Increasing?

A “gray divorce” refers to a marital dissolution where both spouses are 50 or older at the time of divorce. Over recent decades, this has become far more common due to the aging of our population¹ — with roughly one in four divorces in New Jersey now classified as gray divorces. Older, long-term marriages — even those lasting 20 years or more — now end in divorce at rates once seen only among younger couples.

Several societal shifts contribute to this rise:

• Changing attitudes toward marriage, with less stigma around divorce at older ages.
• Longer life spans, prompting reevaluation of long-term partnerships in the later stages of life.
• Women's increased workforce participation, providing greater financial independence than prior generations.
• Retirement of one or more of the parties where they are in a position of spending more time with each other than they have had in years resulting in changes in their relationship dynamics.
• Economic stressors and lifestyle differences, including disparities in retirement readiness.

For many older couples, the decision to divorce is not about child custody anymore, but financial survival and personal fulfillment.

The Financial Realities of Gray Divorce

Older divorcees face financial issues that differ from those experienced by younger couples. These financial realities can shape the quality of life for years — or decades — after divorce.

Retirement Savings and Asset Division

In New Jersey, retirement plans and pensions earned during the marriage are marital assets subject to equitable distribution. This includes 401(k) plans, traditional pensions, IRAs, and defined benefit plans.

The key tool for dividing retirement assets in divorce is a Qualified Domestic Relations Order (QDRO). A QDRO lets the court and plan administrator designate a portion of retirement benefits for the ex-spouse — without early withdrawal penalties — and defines how much of the plan is marital property.

However:

• Equitable distribution doesn't always mean equal; courts aim for fairness, considering length of marriage, income history, contributions by both spouses and a host of other “statutory factors”.
• Retirement accounts earned before marriage or after the divorce filing are typically not marital property.
• The timing of valuation and distribution can dramatically affect long-term retirement planning and security.
• Missteps or rushed decisions can lead to unfavorable tax consequences if a QDRO is mishandled.
• QDROs for pensions that go into “pay status” must be handled differently.

Beyond retirement accounts, other assets — such as home equity — also must be divided. In New Jersey, high property taxes and living costs can make it difficult for one spouse to maintain a shared home post-divorce, often forcing a sale and relocation.

Reduced Savings and Compounded Inflation

For older divorcees, splitting retirement savings often halves what was expected for retirement. Typically, when a couple separate their respective living expenses are more than half of what it was when they were together. Therefore, what may have covered them in retirement as a couple will not be sufficient for each of them individually when those funds are split. Many have planned for decades of joint contributions and are now forced to stretch smaller nest eggs over the same life expectancy. Additionally:

• Inflation erodes the purchasing power of fixed retirement income, making everyday costs — especially healthcare and housing — harder to manage.
• Older adults living on fixed incomes (like Social Security and pensions) see the effects of inflation most acutely, with rising costs eating into limited funds.

These pressures can force some older adults back into the workforce, postponing retirement and complicating long-term plans.

All of these considerations must be taken into account when crafting a resolution to a gray divorce.

Social Security: Benefits After Divorce

Federal Social Security Rules That Matter

For many older divorcees, Social Security is a crucial income stream. Even though Social Security benefits cannot be divided in divorce settlements themselves, the program allows divorced spouses to claim benefits based on an ex-spouse's work record under federal rules:

• If the marriage lasted at least 10 years, a divorced spouse can claim up to 50% of their ex-spouse's benefit if that amount is greater than their own benefit — provided they are at least 62 years old and currently unmarried.
• If the ex-spouse has passed away, a divorced surviving spouse may be eligible for 100% survivor benefits starting at age 60 (or age 50 if disabled).

These rules can be a lifeline for financially disadvantaged spouses, especially those who may have taken time out of the workforce for caregiving responsibilities. A divorce settlement involving older parties must consider these Social Security rules.

Recent Federal Law — The Social Security Fairness Act

A significant change at the Federal level is the Social Security Fairness Act of 2023, which was signed into law and became effective in January 2025. This law eliminates the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) — long-standing provisions that reduced Social Security benefits for retirees with certain types of government pensions.

Why this matters for gray divorce:

• Older adults with state or local government pensions who also qualify for Social Security can now receive unreduced Social Security benefits.
• Ex-spouses can claim their spousal benefits without reductions previously triggered by WEP or GPO.
• This change improves retirement security for many public sector retirees — including teachers, municipal employees, and others — who historically had their Social Security benefits reduced due to non-covered employment.

This legislation, while not divorce-specific, has a direct effect on post-divorce retirement security and financial planning decisions.

Medicare and Health Insurance Gaps

For many gray divorcees, healthcare coverage is a major concern.

• Employer-sponsored health insurance often ends when the divorce is finalized.
• Individuals under age 65 may face significant premiums on the ACA Marketplace, or may need to rely on programs such as COBRA, which can be prohibitively expensive.²
• Once a person reaches age 65, Medicare eligibility kicks in, but planning for coverage in the period between divorce and Medicare eligibility is critical.

Without careful planning, a gap in coverage can lead to high medical bills that erode savings. Although it may be difficult to consider and plan for these possibilities when negotiating a divorce agreement, they cannot be ignored.

Inflation's Impact on Retirement and Divorce Economics

Inflation affects everything from basic living expenses to future projections of retirement income:

• Older divorcees living on fixed incomes see the real value of retirement dollars decline over time.
• Rising costs for healthcare, medication, property taxes, and home maintenance can quickly outpace benefits.

Many retirees rely on cost-of-living adjustments (COLAs) from Social Security — which help — but these may still lag behind rapid increases in medical or housing costs.

Inflation's long-term erosion of purchasing power makes it more challenging to plan for 20+ years of post-divorce retirement, emphasizing the need for professional financial advice early in the divorce process.

Inflation is a particularly thorny issue when negotiating a buy-out of alimony. Calculating the potential earnings on a lump (based on marketplace rates of return) may be offset in whole or in part by inflation).

New Jersey Alimony Laws and Retirement

In New Jersey, alimony (spousal support) can have significant impacts on older couples dividing assets. Over the past decade and beyond, the state's approach to alimony has shifted:

Alimony Reform Trends

New Jersey moved away from the concept of permanent alimony toward open durational alimony. One of the major impacts was on duration. Under current law:

• For marriages lasting less than 20 years, N.J.S.A. 2A34-23 (c) provides that: “For any marriage or civil union less than 20 years in duration, the total duration of alimony shall not, except in exceptional circumstances, exceed the length of the marriage or civil union. Determination of the length and amount of alimony shall be made by the court pursuant to consideration of all of the statutory factors set forth in subsection b. of this section. In addition to those factors, the court shall also consider the practical impact of the parties' need for separate residences and the attendant increase in living expenses on the ability of both parties to maintain a standard of living reasonably comparable to the standard of living established in the marriage or civil union, to which both parties are entitled, with neither party having a greater entitlement thereto.”
• Generally, the statute provides that “Determination of the length and amount of alimony shall be made by the court pursuant to consideration of all of the statutory factors set forth in subsection b. of this section. In addition to those factors, the court shall also consider the practical impact of the parties' need for separate residences and the attendant increase in living expenses on the ability of both parties to maintain a standard of living reasonably comparable to the standard of living established in the marriage or civil union, to which both parties are entitled, with neither party having a greater entitlement thereto.”

These particular provisions of New Jersey's alimony statute directly impact the duration of alimony, which must be considered in all divorces but especially in those involving older couples.

Alimony Modification Upon Retirement

Under New Jersey law (e.g., N.J.S.A. 2A:34-23), retirement itself can justify modification or termination of alimony payments, but courts must evaluate the retirement's circumstances — such as whether it was reasonable and in good faith, and whether the supported spouse can meet their financial needs post-retirement. As to retirement, N.J.S.A. 2A34-23 (j)(1) provides that: “There shall be a rebuttable presumption that alimony shall terminate upon the obligor spouse or partner attaining full retirement age, except that any arrearages that have accrued prior to the termination date shall not be vacated or annulled.”

This legal framework means that older couples — where one spouse retires before or after divorce — need to consider retirement timing carefully. Decisions about retiring early, postponing retirement, or negotiating alimony terms in settlement agreements can have lasting financial ramifications.

An additional layer of complexity in gray divorce matters arises when alimony obligations were established before New Jersey's 2014 Alimony Reform Act versus those entered after its enactment. Payees under pre-reform judgments and agreements often relied on the concept of permanent alimony as a long-term income stream and, as a result, may not have accumulated sufficient retirement savings in reasonable reliance on that expectation. In Voynick v. Voynick, decided in 2024, the Appellate Division reaffirmed that courts must carefully consider the distinct statutory frameworks governing pre- and post-reform alimony when evaluating retirement-based modification applications, including the supported spouse's reliance, ability to achieve self-sufficiency, and realistic retirement readiness. As Voynick underscores, while retirement may warrant modification or termination of alimony, particularly under the current statute, courts remain obligated to balance fairness and reliance interests in pre-reform cases where the economic assumptions underlying the original award may no longer be replicable later in life. For older divorcing or divorced couples, this distinction can materially affect post-retirement financial security and must be addressed explicitly in both settlement negotiations and litigation strategy.

Estate Planning and Non-Financial Considerations

Gray divorce often affects estate plans, wills, trusts, beneficiary designations, and inheritance expectations:

• Divorce can automatically revoke bequests to an ex-spouse under New Jersey law, which means wills, trusts, and beneficiary designations must be reviewed and updated after divorce.
• Although the fiduciary selection of an ex-spouse under wills, trusts, general durable powers of attorney and health care documents should be automatically revoked upon divorce, those documents need to be reviewed to determine if the ex-spouse's family members are named as successor fiduciaries and whether the documents need to be updated to remove those individuals and designate new fiduciaries to fill any vacancies.
• Documents and beneficiary designations should be reviewed to determine if an ex-spouse's family member is named as a beneficiary, which can cause ambiguity as to the decedent's intent as well as unintended financial outcomes.
• Life insurance beneficiaries, retirement account beneficiaries, and trusts may still list an ex-spouse unless actively changed. This can create unintended financial outcomes.

Further, divorce later in life often involves legacy planning, coordination with adult children, and adjustments to future care expectations — including long-term care and medical decision-making.

Financial Planning & Life After Gray Divorce

Planning and revisitation of estate planning documents must be investigated and updated with the appropriate estate planning attorneys and/or financial professionals. Because gray divorces intersect with retirement planning, early and comprehensive financial planning is essential. Key areas include:

Timing Social Security

Deciding when to claim Social Security can change lifetime income significantly. Claiming at age 62 results in a permanent reduction in benefits, while waiting to full retirement age or later (up to age 70) increases monthly benefits.

For divorcees, timing strategies should consider:

• Whether to claim benefits based on one's own earnings or an ex-spouse's.
• Eligibility for survivor benefits upon an ex-spouse's death.

Experts recommend working with both legal and financial planners to maximize total lifetime income.

One Big Beautiful Bill Act (OBBBA) Impact on Individual Income Taxes

The OBBBA includes modifications to certain tax deductions that can have an impact on greying divorce individuals. Certain changes in the OBBBA include “sunset”³ provisions and “phase-out” clauses for individuals with higher taxable income. Notable provisions in the OBBBA include:

• An increase to the state and local taxes (SALT) deduction from $10,000 to $40,000 for individuals who elect to itemize deductions. The new SALT deduction is set to increase annually through 2029, includes income phase-outs limitations, and includes a sunset provision that reverts the SALT deduction back to $10,000 by 2030. The income phase-out is summarized in the table below:

Filing Status	Phase-Out Start MAGI	Phase-Out End MAGI
Single / MFJ	$500,000	$600,000
MFS	$250,000	$300,000
Note: MFJ = Married Filing Jointly, MFS = Married Filing Separately, MAGI = Modified Adjusted Gross Income

A new deduction up to $6,000 for individuals who are 65 and older. The new deduction is effective for 2025 through 2028 and includes income phase-outs limitations. The income phase-out is summarized in the table below:

Filing Status	Phase-Out Start MAGI	Phase-Out End MAGI
Single	$75,000	$175,000
MFJ	$150,000	$250,000
MFS (per spouse)	$75,000	$175,000

• A new deduction up to $10,000 for interest paid on a personal vehicle loan for vehicles that are assembled in the United States and is purchased between 2025 and 2028⁴. The new deduction is effective for 2025 through 2028 and includes income phase-outs limitations. The income phase-out is summarized in the table below:

Filing Status	Phase-Out Start MAGI	Phase-Out End MAGI
Single	$100,000	$150,000
MFJ	$200,000	$250,000
MFS	$100,000	$150,000

The consideration of the increased tax deductions, age-based credits, and temporary sunset provisions, can have a meaningful impact on post-divorce cash flows. This impact can help both parties “get over the hump” in negotiations as a paying spouse may consider offering a front-loaded alimony payment or structure an alimony buy-out that takes advantage of temporary tax benefits set forth in the OBBBA.

Emotional & Social Dimensions of Gray Divorce

While the financial side is paramount, it's worth acknowledging the emotional and social challenges of ending a long marriage later in life. Individuals may face:

• Loneliness or loss of identity after decades of partnership.
• Changes in family dynamics, particularly with adult children and grandchildren.
• Mental health impacts, including stress and depression.
• Cognitive decline that could be exacerbated or accelerated by the foregoing circumstances.

Support networks, counseling, and community engagement play critical roles in helping individuals navigate these life transitions.

Conclusion: Planning for a Secure Financial Future

Gray divorce is a growing reality in New Jersey and across the United States. For older adults, the intersection of retirement readiness, federal benefits, healthcare coverage, inflation pressures, and changing state and federal laws creates a complex financial landscape.

Key takeaways for those facing or considering gray divorce:

• Plan early: Consult legal and financial advisors before finalizing divorce terms. Attorneys who specialize in elder care may need to be consulted as well as matrimonial and estate planning attorneys.
• Know your benefits: Understand Social Security eligibility, Medicare timelines, and how retirement assets will be divided.
• Update documents: Revise wills, beneficiary designations, and estate plans post-divorce.
• Manage healthcare gaps: Prepare for the insurance gap between divorce and Medicare eligibility.
• Stay informed on laws: New Jersey's evolving alimony and pension division laws can impact future income and obligations.

By understanding the legal and financial forces at play — and taking proactive steps — older divorcees can better secure their financial well-being and create a plan that supports their goals for a fulfilling life after divorce.

Footnotes

1. According to AARP, as of 2024, approximately 18% of the U.S. population was age 65 or older and this share has increased significantly over the past several decades – up from around 12.4 % in 2004. This growth reflects the aging of the Baby Boomer generation and broader demographic shifts. Projections also indicate a continued aging. By 2030, roughly one in five Americans (about 20%) is expected to be 65 or older.

2. Recent federal action has increased ACA Marketplace costs primarily by allowing pandemic-era enhanced premium tax credits to expire. Without these subsidies, many enrollees—especially older adults—face dramatic premium increases, higher out-of-pocket costs, and greater financial uncertainty before Medicare eligibility.

3. A sunset tax provision is a tax rule that has a set “expiration date” unless Congress acts to extend or make it permanent.

4. Taxpayers should receive Form 1098 for their lender showing interest paid on qualified purchases.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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