Canadian divorce rates for most age groups are on the decline with the exception of Baby Boomers (people born between 1946-1964). People over the age of 50 are calling it quits at a higher rate than younger people, leading to a trend which is being called “grey divorce”. While the reasons for ending the marriage (especially after several decades together) may include longer life expectancies, one major factor is that being divorced is no longer seen as a one-way ticket to financial hardship.
Financial Decisions in Grey Divorce
Going through a divorce is a major life change and even the most amicable splits have some element of pain and regret attached to them. When planning for the transition from “we” to “me,” financial decisions must be made with the head and not due to emotional attachments or a way to punish the former spouse.
Should you Keep the House in a Divorce?
Some women may decide very quickly in the separation process that they want to remain in the family home. This can be the right decision, but the benefits of staying in the same place (convenience, emotional attachment to the residence, stability for children or parents who share the home) must be weighed against the full cost of owning the house.
All homes require maintenance, and the cost of repairs (major and minor), property taxes and other expenses must be considered. Will a loan need to be taken out to buy out the other spouse’ share in the home? If so, the repayments will need to be factored into all the previously mentioned costs. The decision to keep the family home should only be made when you know for sure whether or not you can actually afford to keep the house.
Will you be Able to Save for Retirement?
You also need to ask yourself whether keeping the family home will be at the cost of your future retirement income. If your spouse will be retaining their pension plans, RRSPs and other assets while you keep the family home will you have the excess income required to start building your own retirement savings? Do you have enough years ahead of you to be able to adequately save for the retirement you want? Or will you be willing to downsize at a later date to help fund your retirement lifestyle?
Protect Child and Spousal Support with a Life Insurance Policy
It’s also important to take into consideration other assets such as life insurance policies. If you are receiving child support or spousal support (alimony), you will want to ensure those payments are protected in case your spouse should pass on.
If separation and grey divorce are inevitable then it is very important to get a handle on financial issues that may affect you now. as well as in the future. Making uninformed decisions today can have long-term consequences. Working with your own financial advisor is a great first step in getting a clear idea of your current financial picture. A financial advisor can also help create a financial plan that takes into account different scenarios or decisions that you may need to consider throughout your separation and divorce and how they will impact your future financially security.