“Silver separations” costlier for older couples than those divorcing earlier in life
This article discusses the difficulties faced by baby boomers experiencing the “grey divorce” phenomenon.
Data from a recently released study is suggesting that the phenomenon of “silver separations” is having a more significant impact on older couples than those divorcing earlier in life.
Economists Angela Hung and David Knapp of the RAND Corporation looked at American couples who divorced in their fifties and found significant differences in the monetary impact of the now-former spouses. Motivating them was the growing trend of “grey divorce” among these baby boomers that separate later in life.
According to a 2017 Pew Report, separation among older couples has doubled since the 1990s, while holding steady or decreasing for younger couples. Statistics Canada suggests that a similar trend is happening in this country, where the divorce rates for couples in their late fifties is now reaching 20 per cent, a number higher than other age groups.
The authors of the study set out to understand how de-coupling later in life affected finances as baby boomers aged into their retirement years. The study concluded what they had already guessed, that “median wealth for men and women who divorced earlier is greater than median wealth for men and women who divorced later,” according to the authors.
While divorcing earlier in life is less financially damaging for many couples, it doesn’t apply to everyone who seeks to separate. Looking at the data compiled from the authors’ study, women who divorced in their thirties were worse off than those in their fifties. The study didn’t give a specific reason for why this may be but it could suggest that women of child-bearing age have a more difficult time rejoining the workforce after having children.
Conversely, women who leave their spouses in their fifties could benefit from a more extensive division of assets the couples accumulated for the extended period they were together. The phenomenon, also known as “silver separations,” is also seeing an uptick in senior women walking away from their marriages, with the knowledge that there will be fewer financial hardships for them when they start over, post-divorce.
Toronto divorce lawyer Steve Benmor says that the “grey divorce” phenomenon is a “ticking time bomb” and that “there will be more people divorcing after the age of 60 – the kids are out of the house and parents are looking at each other, contemplating their retirement and one wants to travel, and the other wants to stay home and knit sweaters.”
While there is no way for seniors to anticipate a divorce, taking control of their finances is a top priorty for this age group. According to the BMO Retirement Institute, there are more assets that could be divided, including houses, RRSPs and CPP pension credits, all of which are eligible for splitting when a marriage ends.