Divorce at any age is difficult, but when it happens later in life—often referred to as “gray divorce”—it can come with added financial complexities. As more couples over 50 face this situation, the division of assets like savings, pensions, and even the family home can create unexpected strain on retirement plans. What was once planned as a secure retirement for two can quickly become a challenge for one or both partners to manage on their own.
The good news? There are ways to reduce that strain and move forward with confidence.
In this final installment of our “Reversing Retirement Challenges” series, we’ll explore how home equity strategies can offer financial flexibility for both spouses during a gray divorce, helping them navigate their new financial reality with greater ease and peace of mind.
The Challenge: Managing Finances After Gray Divorce
Later-in-life divorces can significantly alter retirement plans. When assets meant to support two are split, both partners may find themselves struggling to maintain their lifestyle. The family home, which is often a major financial and emotional asset, adds another layer of complexity—whether one spouse is staying or both are moving on.
For the spouse remaining in the home, managing an existing mortgage (if applicable), along with property taxes, insurance, and upkeep can quickly become overwhelming. On the other hand, the spouse who leaves the home may face the challenge of finding new housing, which can be difficult to afford, especially after splitting retirement assets.
The Solution: How a Reverse Mortgage Can Help
For homeowners aged 62 and older, a Home Equity Conversion Mortgage (HECM)—also known as a reverse mortgage—provides the opportunity to convert a portion of your home’s equity into cash for any purpose. While many use it to boost retirement cash flow or bolster savings for future expenses, the flexibility of reverse mortgages allows them to be tailored to meet a variety of financial goals, no matter the circumstances.
In the case of a gray divorce, a reverse mortgage can be leveraged strategically to provide much-needed financial relief.
Here are a few ways a reverse mortgage can be used to meet the unique needs of a gray divorce. As always, we recommend you discuss these options and their impact on your unique financial situation with a trusted financial planner or divorce lawyer.
- Buyout by One Spouse
When one spouse wants to stay in the family home, a reverse mortgage can provide the funds needed to buy out the other spouse’s share of the property. This solution allows the staying spouse to maintain ownership without taking on a traditional mortgage or depleting retirement savings—so long as they meet their loan obligations, keeping current with property taxes, insurance, and maintenance. By strategically leveraging a reverse mortgage, the remaining spouse can stay in the home they love while the departing spouse receives their share of the home’s equity. - Extra Cash Flow for the Staying Spouse
For the spouse who stays in the home, a reverse mortgage can provide valuable financial relief by offering ongoing cash flow to cover day-to-day expenses and other potentially burdensome bills like medical costs or home repairs. Whether through a lump sum disbursement, monthly payments, a line of credit, or a combination of these methods,1 this flexible option helps ease financial pressures and allows the staying spouse to manage their finances comfortably without the added burden of monthly mortgage payments.2
Looking Ahead: Securing Financial Stability Post-Divorce
Gray divorce may introduce new financial challenges, but it also opens the door to smart financial strategies like reverse mortgages that can ease the transition. Whether staying in the family home or seeking new housing, leveraging home equity through a reverse mortgage can help preserve retirement savings, ease financial pressures, and offer greater financial freedom during a time of difficult change.
Divorce is rarely easy, but with the right financial tools, it’s possible to move forward with confidence. A reverse mortgage offers the flexibility and support both spouses may need to navigate this new stage of life and secure a stable future.
Take the Next Step with Longbridge Financial
If you or a loved one is experiencing a gray divorce and have concerns about the financial changes ahead, Longbridge Financial is here to help. Our team of experienced professionals is ready to guide you through your options and show you how a reverse mortgage could help reshape your financial future. Reach out to us today to learn more about how a reverse mortgage can provide the financial flexibility you need to confidently move forward and reach your goals.
As we conclude our ‘Reversing Retirement Challenges’ series, we hope these insights have empowered you with valuable strategies to navigate your financial journey in retirement. Though retirement may come with its challenges, the versatility of a reverse mortgage offers a wealth of strategic solutions to help you navigate them with ease. Remember, the path to a stable and fulfilling retirement is within reach—with the right plan and support, you can enjoy your “golden years” to the fullest!
