Rebuild your life after divorce to survive post retirement
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Rebuild your life after divorce at 55
As much as you may hope for an ideal marriage, and the perfect, ‘till death do us part’ lifetime with your spouse, it is possible that feelings or priorities can change. Whether you have been together for 4 months, 4 years or 40 years, life after divorce is never easy. However, ending a marriage later in life, presents certain unique challenges that are not only emotionally draining, but may also impact your retirement finances.
While there is no recent data available for the 55 plus divorce rate in Canada, as per Statistics Canada, in 2017, more than one million divorcees were over 55 years old. Instead of spending their retirement years stuck in unhappy marriages, many individuals are making the bold choice of a late-life divorce, also known as a ‘grey divorce’. Many of these individuals struggle with the question, “How shall I go about rebuilding my life after divorce”?
Are you at a similar stage, where you are considering a happier retirement alone, or with someone other than your spouse? Here we will provide some more information to help you know more about the potential costs and consequences. Learn how to survive a divorce at 55, financially and emotionally.
The financial drain on life after divorce: how much does it cost?
From court fees, legal fees and documentation charges, to expert reports, counselling and other litigation expenses, there are several costs that may add up while seeking a divorce1.
- In case of an amicable separation, you can avoid lengthy negotiations in court, and spend as little as $5,000 to $10,000 to go through the separation formalities. File your own divorce application for a fee of $300 to $450, based on your province. This usually includes the application charges and registration fees. Make sure to check your provinces’ rules to see what this cost could be for you.
- A bitterly contested separation may lead to expensive settlements, with amounts that can go into millions, depending on your situation. In Canada, the average cost of a contested divorce is $13,638.
- The more complex the divorce, the more time you will spend in court. Legal proceedings can cost around $20,000 for one to two-day sessions, and about $35,000 for a five-day trial. Including the legal fees and court charges, you could be looking at upwards of $50,000 in expenses.
- The Canadian national average of divorce lawyer’s fees is $1,845. The cost of additional expert services or testimonies could range from $2,000 to $15,000, depending on the nature of the requirement.
A divorce at 55 or beyond is inevitably a drain on your finances. In addition to the legal costs of getting a divorce, you may want to keep in mind the expenses associated with sharing your assets and liabilities.
- Division or liquidation of property or other physical assets, as well as settlement of outstanding mortgage
- Treatment of joint bank accounts, co-owned investments, vehicles and other assets
- Sharing of retirement and social security benefits
- Custody and support for children, if they are not yet legal adults, a possibility in a late marriage.
- Other costs related to managing the home, vehicle, insurance and personal expenses
How to survive a divorce financially – start by keeping your legal costs low
In order to contain your expenses, consider family mediation, or check your eligibility for provincial programs that offer free counsel and legal aid to individuals in a certain income bracket. A systematic account of your financial position will simplify the dialogue between you and your spouse, and help you avoid expensive, long-drawn litigation. For this purpose, create a comprehensive list of your assets and liabilities, including:
- Insurance policies, pension statements and annual tax returns
- Information on all registered accounts, such as your RRSPs, LIRAs, TFSAs and RESPs
- Details of all the properties you own/co-own, along with mortgage statements, current property assessment, property tax statements, utility bills, maintenance and repair work receipts, and rental income statements (if applicable)
- Information on all your outstanding debts, loans and lines of credit
It is important for both people in the marriage to get a grip on their personal and shared finances before going through the official divorce proceedings. If you have never been exposed to household expenses before, you may be in for a sticker shock when it comes to managing the costs of living separately. You may want to gather all the relevant information and use the divorce calculator for Canada to know more about the support payments that you may be eligible to receive.
The emotional drain: coming to terms with life after divorce at 55
Although divorce is tough at any age, a late-life separation from your spouse of many years, can be particularly stressful. The deep, sentimental, shared family history is something that you may never be able to let go of completely. In addition to the loss of a long-term partner or companion, you may also have to brace yourself for a dwindling set of extended family and mutual friends. You may experience:
- Loss of familiar surroundings: unless there is a decision to cohabitate even after a divorce, one of you may have to say goodbye to the neighbourhood, long-time neighbours and other local, social activities that you were part of
- Degradation of relationships: in a common social circle, your friends may find it difficult to continue communicating with either you, or your spouse
Overcoming the psychological trauma of life after divorce
In a divorce at 55 or after, the sudden loss of family, friends, home and neighbours, along with the financial burden of life after divorce may have a huge psychological impact. This could lead to both, physical and mental distress that may manifest in several ways, including:
- Withdrawal from social interactions
- Stress eating, or aversion to eating
- Low self-esteem, or distorted body image
- Sleep deprivation
- Constant irritability or fatigue
- Ignoring responsibilities, or lacking focus in routine activities
- Frequent crying
In fact, the National Population Health Survey report indicates that the two-year period after the end of a relationship poses a high risk of depression for the divorced couple. While you have the option of seeing a divorce counsellor, coping with the psychological effects of a grey divorce may be a long, tedious process. However, if you are thinking positively and looking at rebuilding your life after a divorce, there are various ways to move forward.
Although life after divorce may take some getting used to, you can address the isolation and loneliness by reviving your physical and emotional wellbeing:
- Make new friends and find support groups, if you need to talk through difficult situations (the website Meetup.com lists hundreds of self-help and social groups for older divorcees)
- Engage in some form of daily workout or meditation
- Eat healthy and avoid any unhealthy habits
- Pamper yourself with indulgent baths, feel-good movies or books
- Pursue your favorite art or hobbies, or try solo-travelling
Who knows, you may even find love again and consider remarriage.
The impact of divorce at 55+ on your retirement finances
Gisèle Harrison, a Clinical Social Worker in private practice in Windsor, Ontario, works with numerous older divorcees and finds that financial difficulties are often a key issue. “Some of the people I see had a plan to retire at 55,” says Ms. Harrison. “But then divorce comes along and throws their retirement plan back a decade”.
So, what exactly are the financial effects of a divorce at 55 or after? Is it possible for someone with a modest retirement fund to survive a divorce financially? Here are some aspects that may give you a better perspective on your situation.
- Pooling and division of assets: a divorce in your retirement, or close-to-retirement years would mean your asset pool is mostly static. The division of such assets can be challenging, especially if you have to part with a substantial portion for spousal or child support. Living separately will come with its own set of costs, since you may now have to re-acquire or separately own the previously shared assets, such as homes, monthly payments, vehicles, appliances, and other lifestyle requirements. At a time when you were planning to relax and count on the savings from your nest egg, you may be faced with some financial stress.
- Treatment of the marital home: A key consideration in your divorce would be the treatment of the marital home. Based on your financial situation, you may want to:
- Buy out your share of the property and retain the home for sentimental reasons
- Liquidate the property and share the proceeds
- Continue to cohabitate under the same roof, even after divorce
- Retirement funds and taxes: If you have been contributing to the Canada Pension Fund (CPP), you may have to look at the pros and cons of collecting your CPP benefits before or after you reach the age of 65. Although every year of starting later than 65 will give you 42% more pension per year, your financial situation at the time of divorce may dictate how soon you need to start collecting. Another consideration is that CPP is taxable, and early withdrawals may create a higher tax burden, than if you wait until you’re 65.
Divorce at 55+? Learn how you can survive and thrive
Despite all its downsides, most Canadians are able to lead a happy life after divorce. Surviving a divorce financially, and rebuilding your life, thereafter, can be easier if you follow these few tips:
- Keep your divorce costs low: use a mediator for your late-life divorce
- Not only will that save you a lot of money, but with professional intervention, you will be able to separate with integrity, and keep the process as smooth as possible
- Become finance-savvy:
- Learn the basics of finances from simple, self-help books, such as “Love & Money” by Jeff D. Opdyke, “Women and Money” by Suze Orman’s, or “Dumping Debt” by Dave Ramsey
- Check out Marion Korn and Eva Sachs’ “When Happy Left Sally” -this book specifically addresses the challenges of grey divorce and offers suggestions to successfully navigate a late-life separation
- Take advantage of the free financial literacy initiatives organized by the Canadian Bankers’ Association, specifically for retired Canadians
- The program includes free seminars and online advice on cash management, financial abuse and protection from fraud
- Realign your finances: consolidate your various assets, investments and insurance policies with a trusted advisor who ensures that your financial plans align with your new situation
- This will also help in easily updating your beneficiaries in all the relevant areas, and keeping management fees in check
If you are concerned about your finances after divorcing at 55+, you can count on HomeEquity Bank. Our CHIP Reverse Mortgage® allows you to cash in part of your home’s equity, without having to make monthly payments. You could use the extra funds to buy out your spouse’s share of the marital home or boost your pension income and ensure that your retirement plans stay on course.
If you are considering or going through a divorce, you shouldn’t have the added stress of your financial future to think about. The CHIP Reverse Mortgage could be the financial solution for you. Call us at 1-866-522-2447 or try our reverse mortgage calculator to see how much tax-free cash you could qualify for.
1Figures mentioned below are sourced from: https://www.nbc.ca/personal/advice/budget/how-much-does-a-divorce-cost.html
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