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Retirement lifestyle

October 19, 2015

Starting over after a late-life divorce

Ending a marriage when you’re past 55 presents unique challenges, especially when it comes to your personal finances.

Separating from his wife after 41 years of marriage was the most difficult decision of Jack’s* life. With three grown children and most of his working life behind him, Jack spent hours in counselling and nearly 10 years grappling with the options before moving out into a small apartment.

“When you get to be 65, you want to say ‘I’m in a pretty good place’ — and we both weren’t saying that,” he said. “It’s not all roses. I really miss the family, I miss our shared history.”

Jack decided to pursue a legal separation from his wife rather than a divorce so she could continue to receive medical benefits through his employer. They came to an agreement and remain on friendly terms.

A growing phenomenon

Jack is among a rising number of Canadians who decide to end their marriages later in life. According to Statistics Canada, the rate of divorce has been steadily growing among those 55 and over; often called “grey divorce,” it’s expected to increase as more people age. Marriage remains the dominant family structure but according to census data, it only represented 67% of Canadian families in 2011, down from 91.6% in 1961, before the advent of the Divorce Act.

“Divorce is sad but it doesn’t have to be bad. For both people, there will be sadness — there is a deep family history and values,” said Marion Korn, a family lawyer and partner in Mutual Solutions. Korn and business partner and certified financial planner Eva Sachs work with clients in the Toronto area to help them move past divorce. They’ve noticed a spike in clients in their 50s calling it quits — which prompted them to co-author When Harry Left Sally, the first Canadian resource of its kind that presents the many different faces of grey divorce.

Financial considerations of grey divorce

There are unique challenges facing those who opt to divorce later in life, including understanding and taking ownership of personal finances. Here are some important considerations for those dealing with a separation:

  • Inventory your assets. Collect details about your personal financial situation — tax returns, year-to-date pay stubs, benefits statements from your employer, insurance policies, pension statements and information on all registered accounts (RRSPs, RRIFs, TFSAs and RESPs). Pull together information surrounding family real estate — current property assessment and the property tax statement for the family home, cottage, rental properties, utility bills, receipts for maintenance or repair work and statements of rental income and expenses for all properties.
  • List your liabilities. Compile information for all outstanding loans and debts other than a mortgage, such as lines of credit, credit cards or car loans. A comprehensive overview of what you own and what you owe will help you make decisions about the future.
  • Update your beneficiaries. As with any big change, it’s important to keep beneficiaries on investment accounts and insurance policies up to date.
  • Consider consolidating. After separation, it can be common to find assets in several different places after taking full ownership of your accounts. Consolidating with one trusted advisor has many advantages. An advisor will make sure you take care of things like changing beneficiaries on insurance policies or RRSP accounts. Bringing all your investments together under one roof may also qualify you for reduced management fees.
  • Update your will. Revisiting your estate plan is a good idea to ensure your will falls in line with your new circumstances. Consulting a lawyer you trust can help ensure your intentions are effectively updated and captured.

Finding a silver lining in social media

Access to new technologies means many divorcees aren’t destined for a lonely future. “Research shows that 80% of grey divorcees will date and 30% will re-marry. Social media creates a sense of security — 15 to 20 years ago, you could have been facing the prospects of loneliness but now we have tools to connect,” said Sachs.

Joanna* falls into that category. After 20 years, her marriage fell apart after she found out about her husband’s affair with a family friend. They pursued a difficult divorce that ended in court years later. Joanna worked with her advisor to understand her finances and plan for her future.

“My advisor sat down with me and helped me put together a plan — what I made, what I owed, what I owned,” she said. “I needed that, to be honest. It helped me realize that I was going to be okay and that I could afford to be independent.”

After 27 years away from the dating scene, the thought of moving on was daunting at first. Joanna’s daughter helped her set up a profile on a dating website where she reconnected with Paul, a friend she had lost touch with after high school. Joanna and Paul were married in a small ceremony four years ago.

“Five years ago, I never would have thought I’d be where I am today,” she said. “Life is so much better than I could have imagined.”

* Names have been changed to protect the privacy of the individuals interviewed.

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