What is grey divorce?
The term grey divorce is used to describe the growing trend of couples aged 50 and older divorcing, often after long marriages.
Grey divorce often happens to empty nester couples’ who were staying together for the sake of their now grown children.
If 1 or both spouses in the marriage is unhappy, they may decide that with up to 40 years to live in retirement, they want something different.
Other reasons could be falling out of love or simply growing apart from their spouse.
The financial impact of grey divorce
Whether it’s an opposite-sex or same-sex marriage, here are some of the financial considerations of grey divorce:
Division of property
This can be more complicated because the couple has likely accumulated significant assets during the marriage and they may be intertwined.
Retirement planning
Because they are much closer to retirement or actually retired, grey divorcees may need to re-evaluate their retirement budget, goals and plans.
As well, if 1 spouse was the primary breadwinner and the other a homemaker, it can lead to uneven Canada Pension Plan contributions. These can be equally dividedOpens a new website in a new window after a separation or divorce.
Estate planning
With divorce, each spouse may wish to change the beneficiaries on life insurance policies and investments. They’ll also likely want to update their wills.
In some instances, their grown children may have ideas of their own about where money should go. They may see their inheritances changing or may rely on their parents for financial help.
The matrimonial home
This may be the single largest asset the couple owns, and they may own it outright by this time in their lives. Will it be sold so the proceeds can be split? Will one spouse buy out the other? Where will each spouse live? Will they buy something small or rent?
Insurance
If 1 spouse relies on them other for health insurance coverage, will that spouse need personal health insurance? Do both spouses need to update their life insurance to cover end-of-life costs and debt?
Why grey divorce may impact each spouse differently
After a grey divorce 1 spouse may face more financial challenges than the other.
This could be attributed to specific roles in their marriage. For instance, someone may have earned most of the money and made most of the financial decisions. After a divorce, they may have more experience managing money.
Because of this, it’s important both spouses consult with an advisor for help with their post-divorce financial planning.