I'm 62 with $1.2 million in investments, but I don’t own my home. Can I afford to leave my husband?

Prior to that, Susan made a steady salary. Over the years, she's amassed $1.2 million in investments, but those assets are not liquid, and she's not ready to tap into her retirement savings just yet.

She knows she's likely entitled to a share of marital assets, but she's worried it won't be enough to support living on her own. She's also wondering if she should claim Social Security at 62, even though it would mean a permanently reduced monthly benefit.

Gray divorce is on the rise

Gray divorce — or divorce after 50 — is on the rise. Divorce rates among those 50 and older have roughly doubled since the 1990s, according to the Pew Research Centre (1).

Of those, 34% had been married for at least 30 years, and 12% for at least 40 years. Research from the Pew Research Center suggests that many later-life divorcees become dissatisfied over time and seek greater independence and opportunities to pursue their own interests.

But gray divorcees — particularly women — tend to be less financially secure than married or widowed seniors. Gray divorce not only increases expenses (two households instead of one), but can also change tax situations, estate plans, and retirement security.

Women are significantly less likely than men to have saved $250,000 or more in total household retirement accounts, according to the Transamerica Center for Retirement Studies. Additionally, about 22% of women and 15% of men have saved less than $10,000 or nothing at all (2).

With gray divorce, there's limited time to recover financially, meaning advance planning is especially important if you're considering leaving a marriage later in life.

Dividing marital assets

In most cases, you're legally entitled to a share of marital assets, which can include property, as well as retirement accounts, pensions, and investments. However, those assets are divided — and how much you'll receive depends on factors such as the length of the marriage and state law, unless you have a prenuptial agreement, which may override default state rules.

There are nine community-property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin (3). If you live in one of these states, marital assets and debts acquired during the marriage are generally considered jointly owned and are often divided equally.

This has its pros and cons. For example, even if a spouse's debt isn't in your name, you may still be responsible for a portion of it (4).

If you live in an equitable-distribution state, assets are divided based on factors like the length of the marriage, income, and financial circumstances — not necessarily split 50/50.

Since Susan lives in Arizona, she's generally entitled to an equal share of community property, which may include equity in the house (even if it's in her husband's name) and income earned during the marriage, including investment gains accrued during that time. However, her husband may also have a claim to a portion of her investments acquired during the marriage, since they are typically considered community property.

Splitting investments and retirement accounts can be complex, so it's important to consult a financial advisor and divorce attorney experienced in late-life divorce. For this reason, it's likely best to avoid a DIY divorce, even if the separation is amicable.

It's also important to consider alimony, particularly for women who took time out of their careers to raise children. Alimony can help maintain a reasonable standard of living or support financial independence after divorce.

Other budget considerations

Aside from any money Susan would receive from alimony and a divorce settlement, she should list all other sources of income, as well as expenses and debts, to create a post-divorce budget.

That budget should take into account her Social Security retirement income, any pension income, as well as personal savings and investments. If she needs to move, she should estimate her new housing costs.

While you can start taking Social Security retirement benefits at age 62, it doesn't mean you should — benefits are permanently reduced if claimed before full retirement age (which is between 66 and 67, depending on birth year).

If you were married for 10 years or more, you may be able to claim Social Security benefits based on your ex-spouse's earning record (this does not reduce your former spouse's benefit). This can help women who haven't worked, have limited work history, or took years off to look after loved ones.

Your benefit would be up to 50% of your ex-spouse's full retirement age benefit, and you're eligible only if that amount is higher than your own benefit.

If your ex has a 401(k) or pension plan, you may also be legally entitled to a portion of those funds — and transfers made under a Qualified Domestic Relations Order (QDRO) generally avoid early withdrawal penalties if handled correctly. This is money you don't want to leave on the table, but it requires a QDRO (5).