Divorce later in life – sometimes called “gray divorce” – has become increasingly common. Many couples who have spent decades together are now choosing to separate during retirement. In part, this trend reflects longer life expectancy. Retirement today can last 20 or even 30 years, and some people decide they want those years to look different than they originally planned.
But divorces later in life can also be complicated. By retirement age, couples often have accumulated significant assets, including retirement accounts, pensions, investments, and real estate. One of the largest assets involved in many divorce settlements is the family home—often owned outright or with a substantial amount of equity.
For homeowners age 62 and older, a reverse mortgage can sometimes be used as a tool when determining how to handle the home during divorce proceedings.
When One Spouse Wants to Keep the Home
In some divorce settlements, one spouse may wish to remain in the home rather than selling it. A reverse mortgage can make this possible in situations where buying out the other spouse would otherwise be financially difficult.
For example, instead of selling the home and splitting the proceeds, the spouse who stays in the home could obtain a reverse mortgage and use a portion of the available equity to help settle the financial division. In some cases, if the divorce has already been finalized, the settlement amount can even be incorporated into the reverse mortgage at closing.
The spouse remaining in the home would still be responsible for property taxes, homeowners insurance, and maintaining the property, but the reverse mortgage eliminates the need for monthly mortgage payments.
Adjusting to Life on One Income
Another challenge that often comes with divorce later in life is adjusting from two incomes to one. Many couples rely on a combination of Social Security benefits, pensions, or retirement savings. When those resources are suddenly divided, the financial transition can be difficult.
If one spouse receives the home as part of the divorce settlement, a reverse mortgage may provide additional flexibility. Homeowners age 62 and older may be able to access a portion of their home equity through:
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Monthly payments
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A lump sum
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Or a combination of these options
These funds can help supplement retirement income, cover living expenses, or provide financial breathing room during the transition to single-income living.
Considering a Move After Divorce
In some situations, keeping the current home may not be the right choice. A homeowner may decide to sell and relocate to a smaller property or a home that better fits their needs. Reverse mortgages can also be used to purchase a new home, allowing eligible borrowers to buy a property while eliminating monthly mortgage payments.
This option has become increasingly popular for retirees who want to downsize or move closer to family.
Final Thoughts
Divorce at any stage of life can be challenging, but especially during retirement when financial decisions carry long-term consequences. For homeowners age 62 and older, a reverse mortgage may be one option to consider when evaluating how to handle the family home and maintain financial stability after a divorce.
As with any major financial decision, it’s important to work with experienced professionals and a knowledgeable reverse mortgage specialist to determine what approach makes the most sense for your individual situation.
Jan and Kelsey are Reverse Mortgage Specialists serving the Erie, Dacono, Fort Collins, Loveland, Greeley, Longmont, Boulder and other Front Range areas of Colorado, as well as the Cheyenne and Laramie communities of Wyoming. Contact Jan and Kelsey to learn if a reverse mortgage is right for you.