Aging Canadians confront cruel financial reality of ‘grey divorce’

TORONTO – When Deborah O’Connor was 50, her marriage died.

At the time, she didn’t realize her decision to leave the unhappy relationship was going to result in a costly battle still being fought in the courts five years later.

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O’Connor estimates she has spent $150,000 in legal bills and other separation-related costs including taxes on a home she no longer lives in.

“It did me in,” said O’Connor, a University of British Columbia professor who studies the effects of divorce on baby boomers and seniors.

According to Statistics Canada, “grey divorce” has been steadily growing among those 55 and over, with rates expected to increase as more people continue to age.

While marriage remains the predominant family structure in Canada, it only represents 67 per cent of Canadian families, down from 70.5 per cent a decade ago — and 91.6 per cent in 1961, before the advent of the Divorce Act, Statistics Canada reported Wednesday in its latest batch of 2011 census data.

And for the first time, the number of common-law families in Canada outstripped the number of single-parent families in 2011, another sign of the declining popularity of matrimony.

As baby boomers — their children grown and moved out of the family home — reach the retirement-age threshold, divorces among couples 65 years old and older are becoming more and more common, according to Statistics Canada numbers that pre-date Wednesday’s census release.

In 2008, there were 1,237 divorces among women 65 and older, 2,486 among men of that age and 852 divorces where both partners were over the age of 65, the agency’s figures show.

O’Connor said it’s no longer just men who are leaving their wives, perhaps for a younger woman. In the past few years, she said she’s heard more cases of older women exiting their long-term marriages by choice.

These “silver separations” usually occur after the children have left the family home, and the women decide they have enough financial independence to go too.

What doesn’t always become apparent right away is that divorces are a costly decision, especially in the senior years.

“Financially, it is devastating,” said O’Connor. “Emotionally, it is way better off for these women.”

Women leave for a myriad of reasons, including unhappy marriages, emotional or physical abuse, or a simple desire to end their partnership, she said. It’s a difficult adjustment period as women deal with their own aging process while also re-thinking how they pictured their retirement years.

Susan Eng of the national seniors advocacy group, CARP, said women have the most to lose in any kind of separation.

“This is going to be an issue for women more than it is for men,” Eng said.

“Still, in this generation, we still have quite a lot of women who are stay-at-home mothers. When they divorce for all the same reasons as other people divorce, they don’t have the same things to fall back on as perhaps younger people who are still working.”

Eng said divorce and money remain sensitive topics among seniors. In recent years, her office has been seeing an increase in calls from divorcees, unsure of how they’re going to make financial ends meet now that they’re alone.

“In society there’s a presumption that after a certain age, these things don’t happen,” she said. “It’s like thinking about sexuality after a certain age, or dating.”

She said she tells these seniors the truth, even if it may be hard for some to hear.

“(I say) ‘If you were barely making it before, you’re going to definitely suffer a blow to your standard of living.'” said Eng. “There is reality to that. There really is no good way of sugar-coating that.”

Tina Di Vito with the Bank of Montreal said there’s no way for seniors to anticipate a divorce, but there are steps that can be taken to prepare for financial independence if it happened.

One of those steps should be understanding and taking control of your finances.

“Upon divorce, there’s going to be a division of property. Assets are divided, which could include things like the home, and could include Registered Savings Plan assets,” said Di Vito, who is head of the bank’s Retirement Institute.

“Pensions like CPP (Canadian Pension Plan) credits are eligible for splitting upon marriage dissolution. There are also entitlements to pension company plans, regardless of the age you are.”

One of the added difficulties of divorce later in life is that seniors are usually on a fixed income, with little opportunity for financial growth because they’re no longer working.

“Reduced assets means that there is less time to rebuild those assets. Whereas if you were younger, in your 30s or 40s and you’re involved in a divorce and division of assets, there is still some time left to rebuild those assets,” she said.

“In later life, that becomes a little more difficult, specifically if you have a retirement date in mind.”