Unique Challenges with ‘Grey Divorces’
In a recent article the Toronto Sun has pointed out the unique challenges that come with divorce for those over the age of 50. The article highlights the importance of seeking financial advice during a divorce. According to the Sun, approximately 80% of people who divorced after the age of 50 will have to delay retirement. Furthermore, 62% stated they do not have enough savings and investments to fund their retirement.
It is important that divorcing couples understand their financial situation during the settlement of their affairs. During separation agreement discussions it is crucial to understand how a divorce will impact your cost of living and ultimately your retirement strategy.
Getting divorced after 50 is much different than getting divorced in your 30s or 40s. Arguably, while you are in your 30 or 40s you have time to rebuild assets and seek out training for a new job. That is why it is extremely important for the above 50 crowd to set realistic expectations when they divorce and learn how to budget appropriately based on incomes.
Another unique challenge that comes with those who divorce closer to retirement is that of pensions. This is especially true in cases where only one spouse has contributed towards a pension. Whether it is the Canada Pension Plan or a private pension, the implications on divorce and your retirement strategy can be profound.
With respect to the Canada Pension Plan, a divorced or separated spouse is entitled to make an application to CPP requesting a credit split of their spouse’s contributions. It is important to note that this even applies to common law spouses. What this means is that the CPP contributions the spouses made during the time they were together can be equally divided after the separation or divorce. A spouse is entitled to a credit split even if he or she made no contributions to CPP. For more information on CPP credit splitting please click here.
Private pensions are a very important source of income for retirees. However, what some people forget is that if they divorce the value of the pension is included in the net family property calculations that divide property between spouses. Therefore, it is possible that a spouse could be liable for up to half of the pension value if the other spouse has no real assets and no private pension. In scenarios where pensions are involved, the division of the pension can be accomplished by way of a lump sum payment or by sharing the monthly pension between the divorced couple when it becomes payable.
Aside from postponing retirement and pension issues, the issue of housing plays a significant role for divorced couples. If the couples own a matrimonial home they will have to decide how to deal with it during their divorce. There are various options available, from one spouse buying the other’s interest to selling the house and splitting the equity equally.
Another challenge that is generally seen is that of employment. Where both spouses have worked throughout the marriage this does not really pose an issue. However, in cases where one spouse has primarily resided at home or worked on a part-time basis, the reality of providing for oneself and having to work full time in a steady job can be overwhelming. Finding secure employment can be difficult to come across for this group as a result of years of being out of the job force and not having the necessary skills to integrate and compete in the work force. While there is some security for individuals who have spouses providing spousal support, such support only lasts as long as the earning spouse is working.
For more information about obtaining a divorce in Ontario, please contact our Toronto divorce lawyer.
NOTICE AND DISCLAIMER: The material posted on this website is for informational purposes only and should not be relied upon as legal advice. If you are in need of legal advice relating to your particular situation it is highly recommended to consult with a lawyer.
Helpful Resources:
Divorce and Separation
Family Justice Services
Child Custody and Access
Spousal Support
Child Support
Division or Equalization of Family Property
Treatment of a Matrimonial Home
Enforcement of Support Payments
Child Protection
Child Adoption
