No matter your age, divorce can be very difficult on your personal well-being as well as your finances. Divorcing at a later stage in life can be even more challenging to your finances. Over the last few decades, with people living and working longer than ever before, we’re seeing an increase in the number of seniors in debt, often times due to marital separation.
While no one wants to think about divorce being the outcome to any marriage, it is important to consider this possibility and be prepared. The best way to protect your finances and avoid debt in the event of a marriage breakdown is to be prepared. An important step to being prepared is being aware of your finances, even if you share joint accounts with your significant other, and especially if your spouse handle the family’s finances including paying bills. We see many situations where only one of the spouses is aware of the monthly expenses and income. It is better that you both are aware of what is coming in and going out. That way, if separation happens, you both have an understanding of your finances.
Many seniors who are experiencing a marital breakdown are at risk for falling into unmanageable debt. Most seniors are either heading towards retirement or have retired. Hence, they are often living on a reduced income compared to when they were in the workforce. Divorced or separated retired seniors not only have to make their pension stretch to cover legal bills, and separate living costs, they also need to consider that they may end up having to share their pension with their separated partner. All of this may result in cash shortages that are often funded by credit.
In divorce proceedings, couples will have to divide up their joint assets, such as a family home, joint bank accounts, RRSPs, TFSAs, pension plans, cars and etc. In cases where one partner keeps the home, they are often unable to keep up with the payments now that their household income has been reduced. The situation is made more difficult if only one of the spouses has pension income, since spreading this to pay for two households may be impossible, especially if the couple had already been struggling to make ends meet.
One of the leading causes of marital breakdown is financial troubles that cause stress between the partners. If you and your partner are experiencing cash flow and debt problems, I encourage you to seek the help of a financial expert, like a Licensed Insolvency Trustee. Most LIT’s provide free advice and walk you through all of your options.