Reverse mortgage professionals have recently been touting the use of Home Equity Conversion Mortgages for clients that may be experiencing what has been coined “gray divorce” or “silver divorce” — divorce among the retired population.
While divorce among Americans overall has fallen in recent years, from 8.2% in 2000 to 6.9% in 2014 according to the Centers for Disease Control and Prevention (CDC), divorce among older Americans is rising: Roughly 10 out of every 1,000 married people age 50 and older divorced in 2015, compared to 5 out of 1,000 in 1990.
Divorce can be stressful financially for any age group, but the financial planning community finds that for older Americans, and particularly for women, the impact can essentially be twofold.
“One of the things we do to help a divorcing spouse is to look at whether he or she will run out of assets,” said Jennifer Jank, a financial planner with Dowling & Yahnke in San Diego, during a recent National Reverse Mortgage Lenders Association conference in Huntington Beach, Calif. “I have seen people who have gone through divorce where the assets are not set up correctly, and one person has a huge tax burden. It’s more difficult during gray divorce because it’s not an option to return to the workforce. It can make things very difficult.”
Jank has recommended reverse mortgages in some cases with clients who are facing challenges associated with gray divorce. In some cases, she says, it is the key to allowing one party or the other to remain in the home.
“If a spouse has an attachment to [it], can we let them stay in the home?” she asked.
It’s a population that can be seen as potentially benefiting from a reverse mortgage, said Anneta Pope, vice president of sales for Premier Reverse Closings.
“It’s a unique situation in that this generation was very traditional,” she said, citing research culled from her time with a reverse mortgage lender. “There was often the man, the breadwinner, and the woman, the homemaker. Now research shows silver divorce is for people in 50s and 60s. it’s the last generation that will look like that.”
While the causes of the uptick in gray divorce are not entirely known, changes in terms of financial independence, longevity, and vitality are leading more people to seek legal separation, Pope said.
“What does that mean for us? When you are dividing marital assets and are running two households as opposed to one… a reverse mortgage makes perfect sense. Whether a HECM for Purchase, or selling the home, or purchasing two homes and pulling lines of credit, the possibilities are endless,” Pope said.
Written by Elizabeth Ecker