Divorce After Retirement

The experts agree: you need to get both legal and financial advice

By Olev Edur

Photo: iStock/Vasyl Dolmatov.

Grey divorce—so many people in their 50s and beyond are getting divorced these days that the phenomenon has acquired its own sobriquet. And while any divorce is painful, it can be particularly devastating in or approaching the retirement years, according to most lawyers and financial advisors.

Statistics on divorce correlated to age aren’t available in Canada (Statistics Canada stopped gathering such data in 2008), but a study conducted in 2017 by the Pew Research Center in Washington, DC, (see box below) found that divorce among US adults 50 or older roughly doubled between 1990 and 2015; among those 65 or older, the divorce rate tripled.

“I’ve tried to pull Canadian statistics, but there aren’t a whole lot out there, so I can’t speak to statistical trends,” says Rick Peticca, a lawyer at Shulman Law Firm in Vaughan, ON. “But I can say that in my practice, I’ve noted a significant increase over the past five to 10 years. It’s growing astronomically.”

The opinion that grey divorce is on the rise is echoed by Deborah Conrad, a partner at BoyneClarke LLP in Dartmouth, NS: “We now have a number of clients who are divorcing after a long marriage; one recent couple had been married for 33 years.”

Linda Long, the principal at Long Family Law Group in Edmonton, says, “We’ve certainly been seeing more older people coming in during the past few years, many of them dealing with spousal support. Some of these agreements were old, and maybe the people were now in new relationships. The husband and new wife would come in and the wife would be grumpy because there was still that tie to the former wife.”

Many Reasons for Increase

What’s behind this surge in grey breakups? There can be many reasons—a communication breakdown, infidelity, financial issues, abuse—but experts also point to more permissive sexual attitudes developed during the 1960s and an accompanying diminishment in the stigma over divorce. Some half-jokingly point to Cialis and Viagra as culprits, driving men to seek more fulfilling connections with new partners. Yet another cause is rooted in demographics.

“We’re seeing more divorces among seniors, but then there are more people in that age cohort, so that’s one reason we’re seeing an increase,” says Debbie Hartzman, a certified financial planner and certified divorce financial analyst at Hartzman & Associates in Kingston, ON. “It’s the baby boomer generation—that’s where we’re seeing the growth.”

Another factor is empty nest syndrome: once the kids are grown and have gone their own way, couples have more time for each other—more time to reassess the relationship—and often don’t like what they see. In a recent report on grey divorce in Canadian Lawyer magazine, Steve Benmor of Benmor Family Law Group in Toronto put it bluntly: “Some start thinking: I’m 55; do I really want to be with her/him for the next 30 years?”

We’ve also become more affluent as a society, and divorce has become a survivable option for dissatisfied partners (predominantly women). “My mother at 76 still works,” Cheryl Goldhart, of the Toronto family law firm Goldhart & Associates, commented in that same Canadian Lawyer report. “This is probably the first generation of women who don’t have to stay in a marriage.”

Peticca sums it up thus: “There may be a myriad of reasons for this growth in grey divorces, but they typically fall into two categories: it happens after the last child has left the nest and gotten married or whatever and, less commonly, it happens following a second marriage. If you remarry, the likelihood of getting a divorce is greater than in first marriages.”

Provincial Rules Vary

Whatever the case, divorce is painful from both emotional and financial perspectives. The federal Divorce Act is the overriding legislation governing divorce in Canada and codifies issues such as how support payments are calculated (according to a formula in the federal government’s Spousal Support Advisory guidelines) and how children are treated (not usually a concern when it comes to grey divorce).

The division of matrimonial property, on the other hand, is governed by provincial statutes that vary from one province to another. Generally, all property accumulated during a marriage, as well as all income (and debt), is split down the middle. This division, or “equalization,” applies to matrimonial homes, savings and investments accumulated during the marriage, and secondary properties (including cottages that may have been handed down through the generations on one side of the family but are treated as a shared family recreation property).

Everything goes into the equalization pot, but each province has some exclusions—which is where many variations arise. “Alberta, for example, doesn’t consider business assets [in property division calculations], but Ontario does,” Hartzman says.

In Nova Scotia, the rules exclude business assets, inheritances, trust assets (unless used for family-related purposes), injury compensation awards, and gifts (provided you can prove they were gifts). “Reasonable personal assets—for example, golf clubs—are also excluded,” Conrad says. “Everything else is divided fifty-fifty. But if you blend non-matrimonial with matrimonial assets, then generally they will be subject to division, as well.”

“Gifts given after marriage are also excluded [in Ontario, among other provinces], but the onus is on the person with the property to show that it should be excluded,” Peticca says. “And while certain assets are excluded, if any money is paid into the matrimonial home or is comingled with other assets by, for example, being placed into a joint account, it loses that exclusionary value.”

There are some procedural differences, as well.

“In Ontario, the legal separation date [at which point asset values are pegged] is defined as the date of the agreement to separate, whereas in British Columbia, it’s a floating target until both parties are agreed on the separation date,” Hartzman says. “People must understand the differences between provinces.”

CPP contributions made during the time a couple lived together can be divided after a divorce, as can pensions. The latter may come as a surprise to some, and while the matrimonial home is often viewed as a family’s single biggest asset, a pension could actually be worth even more, given its long-term income value.

“Most seniors have two major assets—the matrimonial home and a pension,” Conrad says. “There was a recent case here in Nova Scotia in which it was argued that the pension was a business asset, but the court determined that it was not, on the basis that money paid into the plan could have been used for the benefit of the family instead.”

A divorce agreement may also include support payments.

“A husband will often ask: ‘Why do I have to pay support when she sits at home while I’m working? Why should I keep working?’” Conrad says. “It’s a good question, but that’s the law. And it doesn’t matter who was to blame for the breakdown of the marriage or who was normally the major breadwinner. If one of the parties is still working, he or she may be required to pay support.”

Bigger Impact at Retirement

“The biggest impact of divorce is that now you will be living on 50 per cent of your equity as opposed to 100 per cent during the marriage,” Hartzman says. “You’ve got to rearrange all your living expenses; for example, you’ll need a new place to live, but what can you afford? A lot of things are going to change if you have to live on half your equity, and people have a hard time understanding that.”

This difficulty is compounded by the fact that at later stages of life, you may be unable to make up for any income shortfall.

“The challenge when people are 60 or 65 is that there’s not much there in terms of savings,” says Megan Tupper, an associate lawyer at Long Family Law Group. “There’s not enough pie to support them both. If you’re younger, you can make up for that, but at 65, it’s too late, and people are finding there’s just not enough money to go around.”

“It used to be about how to divide assets, but these days it’s about how to divide debt,” Long Family Law Group principal Linda Long says. “The 50s are really the grey divorce area; people have spent their money buying a house, raising kids and putting them through college, paying the mortgage and so on, and they’re faced with a big debt burden. They’re playing a debt shell game, and if there’s an economic downturn and jobs are lost, the marriage breaks down.”

What to Do—and Not to Do

So what can be done if you’re handed divorce papers? How do you minimize the fallout?

All the experts Good Times contacted stressed the importance of getting legal as well as financial advice, but they also suggested doing as much of the groundwork as possible beforehand, tallying up your assets and liabilities and hopefully coming to some agreement on how they can be divided fairly.

Mediation—“collaborative law” or “alternate dispute resolution” arrangements—are also recommended. “I’m a huge fan of alternate dispute resolution,” Hartzman says. “If you can sit down and come to an agreement, there’s going to be a lot more money left in the estate, so to speak, than if you take it to court and have to pay all those legal fees. A lawyer-led negotiation or mediation might cost $1,500—up to perhaps $10,000 at the high end in a place such as Toronto. If it goes to court, it’s going to cost $40,000 per side, minimally.

“You should try to settle as much as you can between you and fight over only whatever is relevant and can’t be resolved informally,” Hartzman adds. “For this, you need good advisors. You need to get independent legal advice, and it’s really important to get independent financial advice, as well. You need to be aware of all the legal as well as financial issues.”

Lawyer Rick Peticca concurs: “We always advise clients to try to keep it out of court. Divorce is nothing more than a dispute, just like a dispute in the schoolyard, where the teacher will try to get the parties involved to work it out among themselves. It’s no different from any area of law, such as with employers and employees. If you can’t reach an agreement yourselves, a third party could become a mediator.”

“Why go through litigation and pay eight or 10 times as much?” Long asks. “Litigation is usually for younger families who have kids [custody is often a stumbling block]. Of course, anything is expensive when you’re hiring lawyers, but we try to direct people into a collaborative law model.”

The more you can do yourself, the better, but Long cautions that professional advice is still essential.

“When I started practising 32 years ago, I was the keeper of the knowledge, so to speak,” Long says. “Now people know more, so we are often limited in scope to looking over what they’ve learned. It’s very much about disentangling what they learned on the Internet, undoing what they think they know, and putting it right.

“One gentlemen aged 71 had a spousal support order for life, so he was still driving a truck at that age, despite having tremors,” Long says. “He was still driving because he felt he had to do it for the rest of his life, but you don’t need to kill yourself over support payments. We were able to put in a variation to cross out the order.”

Finally, if you’re thinking about remarriage, make sure you draft a prenuptial agreement beforehand.

“Create the agreement before you get married,” Peticca says. “It’s worth noting that prenuptial agreements have become significantly more common in recent years, both for younger and older partners. Typically, they’re more common when remarrying. After all, ‘Once bitten, twice shy.’”

US Study Helps Quantify Grey Divorce

According to a report published in 2017 by the Pew Research Center in Washington, DC, based on data from the US Census Bureau and the National Center for Health Statistics, divorce among US adults 50 or older roughly doubled between 1990 and 2015; among those 65 or older, the divorce rate tripled.

“In 2015, for every 1,000 married persons ages 50 and older, 10 divorced—up from five in 1990,” the report noted. “Among those ages 65 and older, the divorce rate has roughly tripled since 1990, reaching six people per 1,000 married persons in 2015.

“Still, the divorce rate for those younger than 50 is about twice as high as it is for adults 50 and older. And since 1990, the divorce rate has also climbed slightly for adults ages 40 to 49, though not to the extent of those 50 and older. By contrast, the divorce rate for adults ages 25 to 39 has fallen from 30 persons per 1,000 married persons in 1990 to 24 in 2015. This decline is attributed at least in part to younger generations putting off marriage until later ages.

“The climbing divorce rate for adults ages 50 and older is linked in part to the aging of the baby boomers, who now make up the bulk of this age group. (In 2015, baby boomers ranged in age from 51 to 69.) During their young adulthood, baby boomers had unprecedented levels of divorce. Their marital instability earlier in life is contributing to the rising divorce rate among adults ages 50 and older today, since remarriages tend to be less stable than first marriages.”

The report notes that the divorce rate for adults 50 or older in remarriages is double the rate of those in first marriages, and that the longer the marriage, the lower the risk: “For example, among adults 50 and older who had been married for less than 10 years, the divorce rate was 21 people per 1,000 married persons in 2015. By contrast, the divorce rate is 13 people per 1,000 married persons for adults ages 50 and older who had been married for 20 to 29 years.”