Bill Gates and Melinda French Gates’s divorce last month made French Gates a multibillionaire and one of the richest women in the world. After the news broke, a spate of news articles considered how the newly independently uber-wealthy French Gates will spend her fortune. The buzz and curiosity around the Gates divorce have been similar to that surrounding the divorce two years ago of Amazon founder Jeff Bezos, who owns The Washington Post, and MacKenzie Scott Bezos. That divorce left Mackenzie Scott with $36 billion in Amazon shares; she has since made headlines by giving $6 billion to charity in 2020 alone.
Despite these high-profile examples of women gaining unfathomable wealth after divorce, for most women, divorce is still a rotten deal. One study found that, on average, women’s post-divorce household income fell 41 percent, almost twice the decline men experienced. The Gates and Bezos divorces are, of course, exceptional in their multibillion-dollar settlements, but they are also representative of the fact that American divorce and property laws are structured to give women in wealthy couples a better shot at an equitable settlement than women ending middle- or low-income marriages.
Before the 1970s, it was difficult to divorce in most of the United States. When a couple did divorce, property was most often divided based on whose name it was held under, at that time usually the husband’s.
But in the late 1960s, legal changes to states’ marriage and divorce laws swept across the country — making it much easier to get a divorce and much less likely that women would be awarded alimony. As divorce rates rose in the following decade, women found that without continuous support payments or an equitable division of property, their household income plummeted after divorce. In addition, they lost a host of economic resources that by law and custom they had received through their ex-husbands, including health insurance and Social Security retirement benefits. In 1976, the women’s magazine McCall’s ran an article dubbing newly divorced women “the new poor.”
In the 1970s, many newly divorced women responded with outrage to their changed economic circumstances. They led sustained campaigns — at the federal and state levels, in the streets, in the halls of Congress and in the courts — to change how property was divided in a divorce. An often overlooked piece of the broader set of women’s rights movements in the 1970s, divorced women’s activism had mixed success.
By the 1990s, divorced women’s activism had won new laws that gave judges the power to divide more types of property in a divorce. Retirement savings, investment accounts and other common forms of long-term investment could easily be divided using relatively simple math, taking into account the number of years married and the number of years of investment.
But Social Security benefits, the most common form of retirement security, are still not allowed to be divided in a divorce. Instead of splitting benefits earned during years married, the laws around Social Security permit a lower-earning, divorced spouse to draw a dependent benefit worth half of the benefit their ex draws, and only if the marriage lasted at least 10 years. This amounts to a two-thirds, one-third split of what the couple could have drawn had they remained together. Couples that end their marriages before the 10-year mark, meanwhile, are eligible only for Social Security benefits based on their individual work histories.
The contrast in how we treat different forms of retirement income after divorce is troubling because of who holds these resources. Social Security is a relatively universal benefit. In contrast, while 47 percent of White seniors receive retirement benefits from sources other than Social Security, such as IRAs and 401Ks, only 30 percent of Black seniors, 24 percent of Asian American seniors and 19 percent of Hispanic seniors do. Participation in non-Social Security retirement savings is also highly unequal across income groups. In 2013, almost 9 out of 10 families at the top of the income distribution had retirement accounts, but fewer than 1 in 10 families at the bottom of the distribution did.
Black, brown and low-income people start out with less retirement security. And the different treatment of retirement income and Social Security in a divorce means that ending a marriage exacerbates this inequality.
In the coverage of the Gates divorce, many have pointed out that the couple’s split reflects a trend toward older Americans ending their marriages. While the overall divorce rate has fallen over the last few decades (down from 50 percent to 39 percent of marriages ending in divorce), the divorce rate for couples older than 50 has climbed.
This trend brings new urgency to the question of how Social Security is handled in divorce relative to the retirement savings of the wealthy. There is no reason Social Security benefits should not be divided equally between spouses at the end of a marriage as other retirement benefits typically are. Indeed, over the years, there have been many legislative proposals to change the program to do just that.
This simple change could make a significant difference. Women over 63 who divorced after 50 have a poverty rate of 27 percent, far outpacing any other group of seniors by marital status and gender. Unlike women who divorce younger, older women have little time to rebuild their incomes and savings after their standards of living plunge post-divorce.
French Gates will never be one of these women, nor will the many divorced women at the top of the income distribution, who still have billions less than she does. But the contrast between her experience and that of most women should push us to change how our legal system treats different forms of wealth and retirement security in a divorce.
Suzanne Kahn is managing director of research and policy at the Roosevelt Institute and the author of “Divorce, American Style: Fighting for Women’s Economic Citizenship in the Neoliberal Era.”