BT: Why Grey Divorce is on the Rise - Insights from Shulman & Partners

Divorce later in life is no longer the exception it once was. As more Canadians over the age of 50 separate after decades of marriage, the financial consequences of what is often called a “grey divorce” are becoming increasingly complex. During a Breakfast Television segment, Shulman & Partners LLP shared insight into how later-life separation can disrupt carefully planned retirements, particularly when couples are relying on fixed incomes and long-held assets. With seniors making up a growing portion of the population, understanding how divorce affects retirement savings, housing stability, and long-term financial security is more important than ever. This conversation sheds light on the unique challenges older couples face and why early planning and informed legal advice can make a meaningful difference during a difficult transition.

During the interview, they addressed the growing trend of grey divorce and the financial strain it can place on individuals who are already retired or nearing retirement. Research cited in the discussion shows that people over 50 are now significantly more likely to divorce than they were decades ago, a shift that has major implications for retirement planning.

One of the most significant challenges highlighted was the treatment of the matrimonial home. For many retirees, their home represents their largest asset and a cornerstone of their retirement strategy. While younger couples may have time to rebuild assets after separation, retirees often do not. When a marriage ends later in life, the matrimonial home is typically subject to division, which can force difficult choices. In many cases, one spouse may need to buy out the other, refinance, or sell the property entirely. This can mean going from being mortgage-free to carrying new debt at a stage of life where income is fixed.

The discussion also explored the impact of dividing retirement savings. Assets such as pensions, registered savings plans, and workplace retirement benefits are often accumulated over decades. Upon separation, these assets must be divided, effectively turning one retirement plan into two. This division can reduce long-term financial stability and, in some cases, trigger tax consequences or early withdrawal penalties if funds are accessed prematurely.

An important point was emphasized: retirees face unique limitations compared to younger couples. With fewer opportunities to increase income, decisions made during divorce can have lasting effects. As a result, they stressed the importance of involving financial advisors early in the process to determine tax-efficient strategies that preserve as much retirement capital as possible.

The interview also touched on preventative planning. While planning for divorce may seem counterintuitive, marriage contracts can be an effective tool for couples with significant assets, particularly later in life. These agreements can outline how property and support will be handled in the event of separation, reducing uncertainty and emotional strain if the relationship breaks down. Although such conversations can be uncomfortable, the insight shared made clear that proactive planning can help protect retirement security and provide clarity for both parties.