The television ads show happy married people knocking items off their bucket lists, but the reality is many couples are going their separate ways instead of spending their retirement years together.
Baby boomers, the largest single post-war generation, are splitting up just as they hit retirement age, with divorce stats spiking among Canadians aged 55 and older. It stands in stark contrast to overall divorce rates, which have been declining since the 1980s.
The trend has even spawned the term “grey divorce.”
“I’m seeing a huge trend in grey divorces,” says Lisa Gelman, whose Toronto-based law firm Gelman & Associates specializes in divorce.
According to Statistics Canada, in 2008 there were a combined 3,723 divorces among couples with at least one spouse aged 65 or older. Among the biggest reasons for the splits: falling out of love and differing retirement visions. “When the kids are out and flying on their own, that’s when people start realizing, ‘Wow, we have nothing to talk about,’” says Gelman.
A divorce later in life can be financially devastating for many, insists Gelman, who added it’s never the “clean break” some couples anticipate. “It’s very sad,” she confesses. “What we often see is people will come in, number crunch in situations like this and say, ‘OK, I’m not leaving.’”
A common misconception is you get to keep what you came into the relationship with. So if you had a million dollars in savings prior to getting married, many clients think that’s theirs when they leave, says Gelman.
All assets, even the ones you amassed prior to marriage, are equally shared upon termination. And if one spouse had a business before getting married, which grew even bigger during the marriage, then earnings from that would also be shared. “The longer you’re married, the more you accumulate and the more is on the line,” adds Gelman. “You can think ‘I’m going to break up and it’s going to be a clean break,’ but really you’re destined to be financially supporting the other person for a long time.”
Businesses, pensions, RRSPs, and other forms of savings and property, such as homes, cars, and cottages, are all on the table and divorce settlements can often turn bitter.
Women also tend to bring fewer assets into a marriage and often leave with less than their male spouse. Some may also have been out of the workforce, raising children, and will need to find a job, says Gelman. In addition, spouses, who have been dependent on their partner’s medical and life insurance plans, will need to get their own coverage.
The couple may also be empty nesters, but still be financially supporting adult children, who are facing a challenging job market.
With all this in the mix, it’s important to have legal counsel that’s knowledgeable and empathetic, says Gelman.
“We play therapist a lot,” she adds. “Our job is not to fuel this fire. You have to be so careful how you put things in letters to the clients.”
If you find yourself divorcing your spouse later in life, or in retirement, you need to compile a comprehensive overview of your financial situation. Here are some things to consider in regards to your finances:
Record your finances. Collect details about all your personal financial information: tax returns; pay stubs; benefit and pension statements; insurance policies; and savings (RRSPs / RRIFs, RESPs, and tax free savings accounts). Also include any real estate holdings such as a family home, cottage, or rental income properties. Keep track of property tax and assessment statements, utility bills, and all other receipts for repairs and general maintenance. Other property such as cars, boats and any other vehicles should be logged. If you own a business, keep a record of revenues.
- Liabilities. Keep track of any outstanding loans, including mortgages, vehicle, and personal credit cards and lines of credit. Also include any commercial debts.
- Update your insurance policies. You will likely want to remove your spouse as a beneficiary on your insurance policies and pension / investment accounts.
- Update your will. After a big change like a divorce you will likely need to alter, or update, your will to make sure it addresses your new circumstances. Consult a lawyer to help see that your will is updated properly and expresses your exact intentions and wishes.
"Grey Divorces" in Canada: Some Practical Aspects