The Complicated Financials of a Baby Boomer’s Grey Divorce
Divorce at any time of life is a stressful and taxing process, but for those over age fifty, it brings different and potentially more impactful financial concerns than for younger people. Divorcees over age fifty are often referred to as “silver splitters,” or as going through a “grey divorce.” What makes these separations unique is the financial impact. The stakes are much higher than they would be for younger divorcees, due to potentially drastic changes to your retirement plans.
According to a study by the Pew Research Center, the divorce rate among couples aged fifty and older has approximately doubled since the 1990s. For couples over 65, the rate has tripled over the same time span.
As of 2019, the Baby Boomer generation is aged 55-74. This generation has been at the forefront of many societal trends and has a long history of pushing back against social conventions. Why should later-in-life divorce be any different?
Primary Reasons for Grey Divorce
Sometimes, the reasons for a grey divorce aren’t that different from the reasons for any other divorce: you’ve grown apart, you’ve discovered that you no longer have anything in common, or a persistent issue such as money management has finally driven you to split up.
In the case of many silver splitters, these realizations come after their children have grown up and left the home. Empty nesters suddenly see that they’ve been so focused on their children all these years that their relationship with each other has suffered. A similar realization can happen after retirement when some couples find that their interests and goals are no longer in alignment. In both of these situations, mediation can be a good first step before you decide to divorce.
Ageing is often another factor for silver splitters. Growing older can give you a new perspective on what is important in your life and what needs to change. Perhaps that includes leaving an unsatisfactory marriage. Additionally, our longer life spans mean that one of every four people aged 65 and over will live past age ninety, and one in ten will live past 95. This knowledge that their lives may go on for another thirty years can cause some couples to reconsider their marriage.
And, of course, there is the perennial issue of money. Earlier in your life, it’s easier to ignore or to cope with your partner’s spending habits if they are not the same as your own. When you’re getting closer to retirement, however, those problems are suddenly much bigger.
Critical Financial Concerns for Silver Splitters
The usual financial challenges that come with divorce are magnified for those of retirement age because of the plans you’ve already made and carried out. If you’ve been saving for retirement jointly with your spouse for several decades, transitioning to supporting yourself alone can be overwhelming.
Additionally, the asset division process is often much more involved than it would be for younger couples since you’ve had so much more time to build your assets. In the best-case scenario, you’ve kept careful financial records over the years, which will make the process of separating them much smoother. Marital assets you’ll need to consider may include:
- Inheritance: Any money or property inherited by either of you and any items purchased with that money, need to be assessed.
- Home and secondary properties: Any residences you own, including cottages or rental properties.
- Liabilities: All debts, joint or otherwise, need to be considered in the marital finances.
- Pensions: The Ontario Family Law Act sees your pension as property, and thus an asset that may be divided in a divorce.
- Other retirement funds: RRSPs and other retirement savings are also subject to division.
Besides splitting your current assets, you’ll need to consider future expenses. Alimony at this stage of life is often more complicated due to the additional assets you may have accrued in your compensation package, including bonuses, stock options, and expense accounts. In addition, those paying alimony or child support are often required to obtain life insurance in order to guarantee financial stability, which can be expensive depending on your age and health status. For more information on spousal support, read our complete guide to spousal support in Ontario.
Also, don’t forget to consider the cost of starting over. Finding a new place to live and rebuilding a home and life is expensive, and should be planned for when calculating the cost of divorce.
Not only will there be additional expenses, but your income will most likely be lower, and your earning potential will not be the same as it was when you were younger. If your divorce eats up much of your assets, you won’t have as much time to rebuild them.
This does not mean that divorce at this age is impossible, or that you’re doomed to live in poverty for the rest of your life afterward. It just means that careful planning is essential in order to achieve your goals.
Call Galbraith Family Law for Assistance
Here at Galbraith Family Law, we have extensive experience with grey divorces. We will help you through the divorce process to achieve the best possible outcome. To get in touch with Galbraith Family Law, you can fill in the contact form on our website or give us a call. If you live in the Newmarket area, call (289) 319-0634; if you’re in Barrie, call (705) 727-4242.