Financial Planning: Navigating the Impact of Grey Divorce

June 2025

Philippe Ryan-Giroux, F. Pl., CFP, RIS
Director of Financial Planning

 

Grey divorce—the term used to describe divorces among older couples—has been on the rise in Canada. As the population ages, more couples in their 50s, 60s, and beyond are choosing to part ways, often after decades of marriage. While this can be a time of personal growth and new beginnings, it also presents significant financial challenges that require careful planning and adjustment.

For many individuals, the emotional weight of divorce is matched by the complexity of managing finances in the aftermath. Divorce at any stage can bring stress, but for those nearing retirement or in their later years, the stakes are higher. The financial adjustments that come with splitting assets, recalculating retirement plans, and redefining one’s future need thoughtful attention.

THE EMOTIONAL TOLL OF FINANCIAL UNCERTAINTY

Divorce in later life is not just a personal transformation: it often triggers financial anxiety. After years of building a life with a partner, many face a sense of loss—not just emotionally, but also financially. There is a legitimate fear of losing financial security, which can feel even more daunting when retirement is on the horizon.

Many Canadians experience heightened stress over their ability to maintain the same lifestyle post-divorce. For some, especially those who have been out of the workforce for years, the prospect of having to support themselves independently can seem overwhelming. In these cases, psychological factors, such as anxiety or depression, can hinder sound decision-making. It is essential to address these emotions through both professional support and practical financial advice to gain clarity and confidence in moving forward.

REASSESSING RETIREMENT PLANS

In Canada, dividing assets during a divorce can be especially complicated when it comes to retirement accounts like RRSPs or pensions. Each partner must consider how these adjustments impact long-term retirement plans, such as when they can retire to the lifestyle they hope to maintain. While the new reality may require sacrifices, it is important to remember that with careful planning, financial stability is still attainable.

This could mean recalculating income needs, adjusting investment strategies, or revising retirement timelines. For some, it may involve downsizing or finding new income sources to make up for what has been lost. By revisiting retirement plans with a fresh perspective, it is possible to create a path forward that secures financial well-being in the years to come.

NAVIGATING FAMILY DYNAMICS AND INTERGENERATIONAL WEALTH

Grey divorce also brings challenges related to family dynamics. The impact often extends beyond the couple, affecting children, grandchildren and even extended family members. For many, the idea of leaving a financial legacy is intertwined with their vision for their family’s future. However, the reality of dividing assets may create tensions or disrupt previous plans.

Older individuals may worry about how their divorce affects their children’s inheritance or their ability to continue supporting family members. Moreover, remarriages or blended families can complicate the legacy planning process, especially when one partner has children from a previous relationship. It is important to have open conversations with family members about how the divorce might affect everyone involved.

THE IMPORTANCE OF UPDATED ESTATE PLANNING

In the wake of a grey divorce, one of the most critical steps is to update estate plans. Divorce necessitates a review of legal documents such as wills, powers of attorney, and life insurance beneficiaries. Failing to make these updates can lead to confusion or misallocation of assets in the future.

After all, the assumptions that governed estate planning during the marriage no longer apply. For example, a spouse who was previously named as the executor or beneficiary may no longer be the appropriate choice. It is crucial to reassess these decisions to ensure that assets are distributed according to the individual’s current wishes. Estate planning also includes considerations around healthcare and long-term care, which are especially pertinent for individuals nearing retirement or retired.

THE PATH TO FINANCIAL STABILITY AFTER DIVORCE

Once the emotional and financial dust settles, it is time to focus on rebuilding. Starting over financially after a divorce does not mean abandoning all previous goals—it means recalibrating those goals to fit a new reality. For many, this recalibration involves focusing on creating a sustainable lifestyle within new financial limits. It is important to approach these changes with a mindset of flexibility and patience.

One of the first steps is to take stock of what is available—divided assets, retirement accounts and potential sources of income. Then, individuals can work with a financial planner and an investment advisor to develop a strategy that aligns with their goals, whether that is saving for retirement or simply maintaining financial stability through the transition.

Grey divorce does not have to mean financial disaster. With careful planning, it is possible to navigate the emotional and practical challenges of divorce in later life and to build a stable, fulfilling future. The process involves assessing both short- and long-term needs, addressing family concerns, and updating legal documents to reflect new realities. This situation also requires a shift in mindset, one that embraces change and focuses on regaining control and a thriving future.

 

Back to Top of Page

Other Articles Of Interest