Out of 130.6 million economic households, almost 18 million (14%) have a divorced head, and almost 4 million (3%) have a separated head. Together, divorced and separated household heads are more than twice as likely as all US household heads to be older—not younger—than age 50: Heads younger than age 50 are 30% of households; heads age 50 and older are 70% of households. Regardless of age, two-thirds of divorced and separated household heads are women. Although separation does not always lead to divorce, when separation does occur, household finances change—new or different products and services are often necessary.

Demographics

Household heads with a postgraduate degree are much less likely than all households to be divorced or separated. Of divorced and separated household heads, 83% are divorced and 17% are separated; the pattern of incidences is the same for heads younger than and older than age 50.

• Heads younger than age 50:
  • Have a mean age of 41
  • Have a mean annual household income of $56K
  • Have (44%) a high-school diploma or less
  • Have (45%) an annual household income of $30K or less
  • Are more likely (57%) than average (35%) to have dependent children
  • Are more likely than average to live in a medium-size city.
• Heads older than age 50:
  • Have a mean age of 61.
  • Have a mean annual income of $43K, in comparison with $69K for all households.
  • Are less likely than average to have dependent children (12%); roughly one in five heads are responsible for dependent adults.
  • Are more likely than all households to live in a rural area.
  • Are retired (almost one-half), and two in ten are preretired; one in five are not retired and not preparing for retirement.

Financials

Because their mean annual income is lower than that for all households, the majority of divorced and separated households own fewer savings and investment products. Mean balances in accounts are lower than those for all households; however, liabilities are also lower.

• Heads younger than age 50 are more likely than all household heads to own custodial accounts.
  • Are less likely to own CDs, US Savings Bonds, 529 plans, stock or bond mutual funds, publicly traded stock, IRAs or SEPs, individual annuities, their home, and tangible assets and have a cash value in their life insurance.
• Heads older than age 50 are more likely than all households to own money market deposit accounts and money market mutual funds.
  • Are less likely than all households to own US Savings Bonds, custodial accounts, 529 plans, 401(k), 403(b) and 457 plans, and real estate other than their home.
• Household heads younger than age 50 are more likely than all household heads (32% versus 23%) to have at least one consumer loan or line of credit other than credit collateralized with real estate or a vehicle.
• Households with divorced or separated heads older than age 50 are more likely than all other households to owe more on a second mortgage or a home-equity-based line of credit on their primary residence or a life-insurance-policy loan. They are somewhat more likely than average (16%) to have a full-service stock brokerage account (20%), but their mean balance is lower than average.

Financial Attitudes and Interesting Tidbits

Some differences in the attitudes of divorced and separated household heads younger and older than age 50 are explicable simply by age. For example, the younger heads are more likely to prefer direct channels; older heads prefer face-to-face interactions for financial services. Some attitudes are fairly universal. For example, a relatively high proportion of both groups of households are not financially confident. Although the majority of all divorced and separated household heads want to be financially responsible, the personalities of the two age groups differ. Higher proportions of heads younger than age 50 are independent whereas heads older than age 50 (almost two-thirds) are passive, loyal, and literal.

• Household heads younger than age 50 are more likely to mostly agree:
  • Always look for lowest-cost financial service (25%).
  • Prefer using a debit card rather than credit card to help control spending (48%).
  • Are afraid the household is not saving enough for future needs (49%).
  • Are concerned about having adequate income during retirement (44%); 36% are concerned about having adequate savings to cover an unexpected illness.
  • Feel as though "I'm living on the edge" (34%).
• Household heads older than age 50 are more likely to mostly agree:
  • It is important that people I deal with for financial matters recognize me and know me by name (33%); 26% agree that chatting with people I know at financial institutions is an important part of doing business.
  • My financial institution has my best interest in mind when offering me financial products and services (25%).
  • I am concerned about the impact that inflation will have on my retirement income (45%); 24% are worried about outliving savings and investments.
  • I feel as though "I'm living on the edge" (26%).

Implications

Overall, divorced and separated households represent a modest market for financial-services providers. Although their financial resources may be more constrained than those of other households, opportunities exist to serve their unique needs and increase the loyalty and deposits of these households though education, information, and advice. Three areas of high interest and low fulfillment exist: borrowing, financial management without professional assistance for some, and planning and reliance on a professional for help with goal setting and transactions for others.

Learn more: Contact us to request an on-site presentation of these findings along with a Q&A session. Presentations are available to MacroMonitor subscribers for a small additional fee.