Reverse Mortgages Aid Senior Homeowners in Gray Divorces

Reverse mortgages are emerging as a financial tool for senior homeowners navigating "gray divorces," marriages ending in later life, typically after age 50. These divorces present unique financial challenges due to fixed incomes and limited assets post-retirement. Research cited by The New York Times indicates that gray divorce rates in the U.S. doubled between 1990 and 2010, according to the National Library of Medicine. Lisa Moriello, national retail reverse sales manager at loanDepot and a Certified Divorce Lending Professional (CDLP), highlighted in a social media think piece that older adults face greater financial and psychological impacts from divorce, with less time to recover. Retirement accounts, pensions, and home equity built for one household must now support two.

Moriello noted that women often bear the brunt of financial setbacks in gray divorces due to lower lifetime earnings and smaller retirement savings. Unlike younger couples, older divorcing individuals have limited ability to replace lost income through new employment or career changes. Misconceptions about Social Security benefits can also lead to tighter post-divorce incomes. Moriello emphasized that for a 65-year-old, a difficult divorce settlement can be the difference between a secure retirement and financial instability, whereas for a 35-year-old, it is a setback.

Housing frequently represents the largest asset in these divorce settlements. Decisions regarding the marital home can significantly impact an older adult's financial stability post-divorce. In situations where one spouse intends to remain in the home, a reverse mortgage can be utilized to fund an equity buy-out while simultaneously removing the necessity of monthly mortgage payments. This strategy allows the remaining spouse to access home equity without the burden of ongoing payments, potentially securing their financial future.