So called “Grey Divorce” isn’t that rare anymore. In 2013, approx. 60,000 couples divorced in Canada. One quarter of those divorces were in their 50’s and 60’s.
Grey divorce can mean delayed retirement and in some cases re-entry into the workplace after retirement. Financial realities can dictate outcomes that are not what one or both partners may have hoped for later in life. For one person, the resentment of having to adjust their life plan is unavoidable. However difficult the adjustment, it is made much worse if the divorce itself is hard fought.
A recent survey conducted by Investor’s Group concludes that a “bitter” divorce has more adverse consequences on all aspects of life, such as management of expenses after divorce, stress caused by dividing assets, depletion of retirement savings and of course the cost of the divorce itself. By contrast, the report concluded that financial advice before during and after divorce has a substantial positive effect. Previous studies did not differentiate between high and low conflict divorces in terms of outcomes and feelings.
Strong financial planning advice is an element that lessens the negative aspects of grey divorce. In a traditional divorce, the couple is left to their own devices to figure out what their settlement will mean for them in the future. Integrating financial projections for a couple into the settlement allows the couple to make sense of the hard decisions they may be facing.
When couples plan for their later years, they do so with the knowledge that events may overtake their best intentions. Investments may be underfunded because of layoffs. Businesses may underperform. Illness may interrupt income. If divorce happens, these possibilities still exist. An after-divorce financial plan needs to take into account the probable as well as the unknown and create scenarios that illustrate both. Necessary adjustments to financial plans can happen whether or not divorce intervenes.
These “grey divorcees” are thinking about personal freedom and retirement all at the same time. There is little room for added concerns, such as conflict and high legal bills. Financial advisors who align themselves with other divorce professionals such as fee-based financial divorce specialists, mediators, collaborative family law lawyers can be an important part of the solution for their “grey divorce” clients.
Eva Sachs (CFP®, CDFA™) is a Certified Divorce Financial Analyst® who has a fee based divorce financial consulting practice and is partner in Mutual Solutions which provides flat fee mediation service packages. She co-authored the book with Marion Korn, “When Harry Left Sally – Finding your way through Grey Divorce” which advocates an approach that brings “grey” separating couples to the settlement table together. The book focuses on maintaining a healthy family, reviewing plans for retirement, creating detailed forward- looking financial plans for both partners and understanding how to negotiate without fighting.