Divorce is never easy, but going through one close to retirement can be especially challenging. So-called “gray divorce,” i.e., divorces involving people over 50, now account for nearly 40% of all U.S. divorces (up from under 9% in 1990). This means many Americans are entering retirement single after decades of marriage, often facing a radically different financial reality than they planned. After 20, 30, or even 40 years of shared finances, a late divorce can upend carefully laid retirement plans.

As a divorce attorney, I’ve seen up close how these late-in-life splits require seniors to rethink everything from how their nest egg is divided to where they’ll live, how they’ll cover healthcare, and who will make decisions for them if they fall ill. Drawing from real-life examples (including those recently shared by Wall Street Journal reporters Veronica Dagher and Anne Tergesen) and my professional experience, this post explores key legal and practical lessons for anyone facing a retirement-age divorce.

Dividing the Nest Egg: Retirement Accounts & Income Split

One of the most crucial legal issues in a gray divorce is the fair division of retirement savings. After a long marriage, couples often have substantial funds in 401(k)s, IRAs, and pensions. In a divorce, those accounts are typically marital assets and can be divided between exes, often requiring a special court order called a Qualified Domestic Relations Order (QDRO) to avoid tax penalties and early-withdrawal fees. Without a QDRO, transferring part of a 401(k) or pension to an ex-spouse could trigger taxes or penalties, so divorcing individuals must work closely with their attorneys to ensure a QDRO is in place.

For instance, consider the story of Mark Sutton, a retired corporate executive from Minnesota. In 2014, as he was approaching retirement, his wife of 23 years filed for divorce. “It was a brutal shock,” Sutton told The Wall Street Journal. On top of the emotional toll, his net worth was cut nearly in half when the divorce settlement required splitting his $1.1 million 401(k) and his pension with his ex-wife. He also lost much of the equity in their longtime home; his ex-wife kept the house, and he had to compensate her for her share of its value. Facing this sudden financial hit, Sutton postponed retirement until age 70 to rebuild his savings.

Delaying retirement allowed him to continue working and max out “catch-up” contributions available to workers over 50. Combined with a strong stock market, this helped him grow his 401(k) back to about $2.3 million by the time he retired. Today, his retirement income is comfortable—about $240,000 a year after taxes—composed of 401(k) withdrawals and monthly pension and Social Security benefits. But his journey underscores how a late divorce can require a major financial pivot, often involving staying in the workforce longer, maximizing retirement contributions, and recalibrating expected retirement income.

For some, a late divorce can have the opposite effect: forcing an earlier-than-planned retirement or career change. A divorce may mean the end of employer-provided spousal health insurance or the need to relocate. In another case in The Wall Street Journal article, 70-year-old Debi Petriscak decided to retire from her job as a nurse practitioner and move hundreds of miles away after her 38-year marriage ended when she was 64, partly to be closer to family. Her divorce reshaped her retirement timeline and lifestyle dramatically, and that leads to some other important financial lessons.

Hidden Costs & Tax Surprises of Splitting Up After 50

Late-in-life divorce often brings financial surprises that younger divorcing couples don’t face, especially around taxes and healthcare. In Ms. Petriscak’s case, she was awarded the family home in California as part of her divorce, a common arrangement in settlements. But that house carried major (and unexpected) costs when she went to sell it. Because she was no longer married when she sold their longtime home, Debi no longer qualified for the full $500,000 capital gains tax exclusion available to married couples when selling a primary residence. Instead, as a single filer, she received only a $250,000 exclusion, leaving her with a six-figure tax bill (around $200,000) on the sale proceeds. In a conversation with The Wall Street Journal, the authors highlighted how being single “dropped [her] capital-gains exclusion to $250,000 from $500,000,” dramatically increasing her taxes on the sale.

That wasn’t her only surprise. The large gain from the house sale elevated her reported income for that year so much that it triggered an IRMAA surcharge, i.e., a Medicare high-income adjustment that more than doubled her Part B and D premiums. Many seniors aren’t aware of IRMAA (Income-Related Monthly Adjustment Amount) charges until they get hit with one: If your income exceeds certain thresholds (even due to a one-time event like selling a home or large retirement withdrawal), Medicare can increase your premiums two years later based on that spike. In Debi’s case, she discovered first-hand that the cost of being suddenly single can include unexpected increases in your health insurance premiums.

Timing and planning can help mitigate some of these costs. For example, if you’re considering selling a long-time home during a divorce, explore whether selling while still married (and filing jointly) could let you use the larger $500k capital-gains exclusion rather than $250k. It may not always be feasible, but if you can coordinate the timing of the sale with your divorce, it could save you hundreds of thousands in taxes. Likewise, if you do have a one-time income windfall in a divorce (like a home sale or sizeable IRA distribution), be prepared for a possible IRMAA surcharge on Medicare premiums. In some cases, because divorce itself counts as a “life-changing event,” you can file an appeal (SSA Form 44) to request Medicare recalculate your premium based on your new lower income. The key is simply knowing these rules exist so you can plan and not be caught off guard. And as always, consulting with a financial advisor or CPA during your divorce can help anticipate and manage tax consequences and healthcare cost issues.

Starting Anew: Lifestyle & Estate Planning Considerations

Beyond splitting assets and paying taxes, a retirement-age divorce means adjusting to a solo financial life. You might find yourself managing money and making major financial decisions alone, without the familiar sounding board of a longtime partner. This was one of the biggest adjustments Debi Petriscak noted after her divorce. She even hired a financial adviser so she wouldn’t have to lean too heavily on her kids for financial advice.

On the flip side, being on your own can bring newfound autonomy and freedom in retirement. As Debi said of her post-divorce life, “I’m going to travel my entire bucket list,” enjoying the freedom to choose where and when she goes. Many late-life divorcees end up downsizing or relocating to better align their finances with their new life. In Debi’s case, she left high-cost California and bought a new home in Alabama (for about $640,000 cash), placing her closer to family and lowering her expenses. Another retiree, Albert Ferreira, found himself needing to downsize and cut expenses after a divorce at age 67: he sold his California home as part of the settlement and ended up with a new mortgage at 5.5% interest, which was higher than his old rate. With a fixed pension and Social Security of $4,500 a month, but a new mortgage and living costs of around $5,500 monthly, he’s learning to budget carefully and reduce spending to avoid dipping into his savings every month.

Don’t forget the legal housekeeping after a divorce, too. It’s critical to update your estate plan and beneficiary designations as soon as the dust settles. Many states automatically revoke inheritances for an ex-spouse in a will (so your ex likely won’t still get your estate), but beneficiary forms on retirement accounts, life insurance, and payable-on-death bank accounts are usually not automatically changed by a divorce. If you forget to change those beneficiaries, your ex could still inherit your 401(k) or insurance payout by default, even if your will says otherwise. Similarly, revisit documents like powers of attorney or healthcare proxies. If your ex is listed to make medical or financial decisions for you in an emergency, you may want to assign someone else instead. (Interestingly, in one case, an older divorcé left his ex-wife as a backup health care proxy, reasoning that he still trusted her judgment should his primary designee be unable to serve. That kind of arrangement can work amicably for some, but most people will prefer to remove their ex from these roles.)

Divorce after 50 is a significant life change, but with the right planning and advice, you can secure your financial future and embrace your retirement years from a fresh starting point. As one resilient retiree put it, “I try not to ruminate on the past but look to the future”. By understanding the legal implications and planning ahead, you can do the same, turning a late-life divorce from a crisis into an opportunity for a well-planned, meaningful second act.