sun-life-help-your-divorcing-clients-through-new-financial-territory

It’s uncomfortable. It’s emotional. But, it’s reality.

It’s called “grey divorce”— a growing trend that’s changing the retirement market. According to Statistics Canada, about 20% of people between the ages of 55 and 64 and 12% of those 65 and over were either divorced or separated in 2011. As our aging population grows, so will these numbers.

It’s a reality that some of your clients are either divorced, in the midst of one, or will be heading toward divorce in retirement. There are unique challenges facing later-life divorcees, including understanding and taking ownership of personal finances — a first-time experience for some. In the midst of emotional turmoil, you can help guide divorcing clients through new financial territory.

FINANCIAL TO-DO’S FOR DIVORCEES

As a start, provide your clients with a list of suggested tasks to make the financial side of their divorce less stressful. Having the facts can help determine how a divorce might impact their short-, medium- and long-term plans.

Here is a checklist to get them started:

  • For specific details about dividing up pensions in divorce, read Who gets the pension in a divorce? on Brighter Life.

LOOKING AHEAD

While your clients might not be ready to think about the future in the midst of a divorce, it’s wise for them to start thinking about their newly single — or possibly remarried — life. Here are a few things you can discuss:

  • Basic living, with less. No matter when in life it occurs, divorce can be costly. But when it involves retirees with a limited retirement income, the financial effects often intensify — as a result of living on one income/pension.
  • Lifestyle of the newly single. Depending on how a divorce turns out, a person’s lifestyle could change dramatically. Clients need to be prepared to potentially make financial sacrifices, changes to their lifestyle and pay attention to their spending habits.
  • Saving to rebuild assets. Essentially, divorce requires people to build a new life with reduced assets. However, unlike their younger counterparts, those who are in their 50s, 60s and beyond have less time to rebuild those assets.
  • Health costs increase with age. Even the healthiest people entering retirement will experience an increase in health expenses as they age. There’s a 49% chance that a 65-year-old man will need long-term care, and a 65% chance for a woman.1 Because they will potentially need to pay someone to take care of them, single clients can expect to spend more on a per-person basis for an equivalent lifestyle than a retired couple.
  • Legacy – the impact of remarrying/coupling. In 2011, Stats Canada reported that 76% of senior men and 55% of senior women remarried following a divorce. When retired clients are getting remarried, there can be complications with ex-spouses, step children and retirement savings that they will need help navigating, especially when it comes to legacy planning for an expanded family.

LEARN MORE

If you have questions or want to learn more, please send an email or call a member of Sun Life Financial’s Wealth Sales Team.


1 Munich Re, 2011

Originally published on Advisor.ca