The Financial Impact of Change

Reverse Mortgage can bring you back to the financial track after retirement

While retirement alone can have a big financial impact on many people, divorce, marriage and the death of a spouse can also significantly affect your finances. Here are some of the ways your finances could be impacted when you experience these four key life changes.


Suddenly having to live without the security of regular wages can be a huge shift, both financially and emotionally.

If you have a good company pension plan or adequate savings, retirement shouldn’t have a negative financial impact. However, only 19% of private companies continue to offer a pension plan and 32% of Canadians have no retirement savings at all.

Many people have to rely on the Canada Pension Plan (CPP) and Old Age Security (OAS) for most of their income. The problem is, the average CPP monthly payment is only $666.56, while standard OAS is just $596.67.

For most people, this is simply not enough to live on. Although you do have fewer costs after you retire, you still have to pay for essentials like property tax, utilities and food, which can quickly eat up your CPP and OAS payments.

For those Canadians without a company pension or savings, retirement can mean either mounting debt, a lower standard of living, or the need to continue to work long after the traditional retirement age of 65.

The financial impact of divorce

Divorce usually means having considerably less income than before, while still maintaining a home. Being single also means you miss out on tax breaks that couples may be able to take advantage of, such as income splitting.

On top of this, you will need to go through the process of separating income and assets.
These include all property, vehicles, valuables, bank accounts and investments. This can be difficult both emotionally and financially.

Hiring a good lawyer can help ensure you get your fair share. It’s also important to fairly divide your debts, otherwise this could come back to haunt your credit rating.

Deciding on who gets to stay in the family home can often bring about major issues. Many people simply can’t afford to buy their ex-spouse out of their share of the family home and are forced to move out.

A divorce can derail even the best financial plans. Suddenly having to pay all household bills with just one income can be tough. For many older divorcees, the financial impact can mean they have to delay their retirement by several years.

How finances change as a widow

When your partner passes away, you will now be solely responsible for the payment of your mortgage, if you still have one. If you are not able to make these payments, after losing your spouse’s income, you may lose your home. If the surviving partner is not on title and there is no will, this could lead to serious legal complications. Having an up-to-date will may help avoid these types of complications.

Unfortunately, you will also lose the benefits of income splitting. This usually means considerably higher tax bills.

Your RRIFs will now be combined and because you are now technically single, the amount you will have to withdraw, and therefore your income, will be considerably more. Higher income can lead to higher taxes and reduced OAS.

Although you will receive a one-time death benefit payment, you will lose your partner’s Canada Pension Plan payments. Another good way to lower your financial risk: by maintaining life insurance into retirement, you can help reduce the negative financial impacts of losing your spouse.

Marriage can bring financial benefits

Being part of a couple can provide financial benefits. By remarrying, you not only get to share living costs, you get tax breaks too. Income splitting can reduce your tax bills considerably and you can also transfer up to half of your eligible pension income to your spouse, which can mean big savings. One caveat: make sure you always consult your financial or tax advisor.

You may also lose some benefits and credits, but overall, most single retirees have significant financial gains when they remarry.

How to cope with the negative financial impacts of change

The CHIP Reverse Mortgage® can be a big help in putting you back on financial track after a big life change like divorce, marriage or the death of a spouse.

This financial solution can be used to boost insubstantial retirement savings or post-divorce income, so you get to retire when you want, the way you want. It can also help you to buy out your ex’s share of the family home or make up for the shortfalls in income after the death of a spouse.

Find out how much you could qualify for by calling us at 1-866-522-2447

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