As much as we’d all like to imagine spending our sunset years rocking on the front porch next to our longtime spouse, the sad truth is that life doesn’t always turn out that way. There’s no age limit on relationship troubles, and many seniors find themselves dealing with divorce at a time when they should be settling down.
“Grey divorce,” as it’s come to be known, refers to the increasing divorce rate among older Canadian couples. Recent numbers from Statistics Canada show that the divorce rate among couples aged 50 to 54 is 38 percent, couples aged 55 to 59 is 48 percent, and couples aged 60 to 64 is 32 percent.
The Cost of Divorce
The problem extends far beyond the emotional toll on both parties. Divorce is often associated with financial difficulties, particularly for older Canadians. Divorces can cost anywhere from $5,000 to $100,000 in legal fees alone. There’s also the danger of one person being saddled with the couple’s lifetime of debt. I’ve seen people suddenly faced with tens of thousands of dollars in debt — something that is far from easy to tackle solo. Separation also means maintaining two households instead of one. On a fixed income this can be hard to accomplish resulting in the possibility of racking up new credit card debt.
Seniors and Debt: A Disturbing Trend
It’s safe to say that grey divorce is one reason that seniors and baby boomers occupy the fastest-rising spot when it comes to Canada’s rising consumer debt levels. According to our own Joe Debtor research study, Canadians aged 50 and older represent almost one-third of all insolvent debtors and the rate is growing. Even more disturbing, we found that the typical pre-retirement debtor aged 50 to 59 is carrying the highest unsecured debt of all age groups: $68,493. Worse still, pre-retirement debtors and seniors were the only age groups still increasing their overall unsecured debt load as of 2014.
Of course, divorce isn’t the only culprit here. Seniors also often find themselves dealing with lower incomes, pressure to support adult children and parents, and health issues. By the time they reach retirement age, they may be carrying more debt than they can possibly manage — divorce or no divorce.
Dealing with Debts and Moving On
It’s hard to move on from a nasty divorce when you’re dealing with excessive debts, which is why it’s so important to create a recovery plan early on. Once you have a handle on how much you owe post-divorce, create a budget and realistically consider how long it will take to get back on firm financial footing. If you’re dealing with excessive amounts of debt or high-interest loans, you may need to consider seeking help from a professional. Filing for bankruptcy or a consumer proposal may be able to help you get past this difficult phase and on with your life.
Ted Michalos is a Chartered Professional Accountant (CPA) and a Licensed Bankruptcy Trustee. As a co-founder & President of Hoyes, Michalos & Associates, he speaks regularly at local commerce and professional events about insolvency issues and has testified before the Canadian Senate on issues of bankruptcy legislation. His expertise focuses primarily on helping individuals solve their financial problems.