{"id":3240,"date":"2025-07-18T13:41:13","date_gmt":"2025-07-18T13:41:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/3240\/"},"modified":"2025-07-18T13:41:13","modified_gmt":"2025-07-18T13:41:13","slug":"what-to-do-when-a-mid-life-divorce-derails-your-well-laid-retirement-plan","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/3240\/","title":{"rendered":"What to do when a mid-life divorce derails your well-laid retirement plan"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Often middle-age divorces can shatter the most well-thought-out retirement plans. The value of all assets at the date of separation, including pensions, RRSPs over $100,000, and any primary residence has to be split.Visual Generation\/iStockPhoto \/ Getty Images<\/p>\n

When Mike Fin got divorced in his late 30s, he had to sell his house in a suburb near Toronto and divide the proceeds. Usually, considering the high housing values in the Greater Toronto Area, that would throw most people\u2019s retirement plans into a tailspin. But for Mr. Fin it made planning his retirement easier, not harder. <\/p>\n

\u201cI was house rich, cash poor and I was living beyond my means,\u201d he said. \u201cThe divorce forced me to sell the house, yes \u2013 I had to divide the assets, but at the end of the day I have greater financial control over my own destiny.\u201d <\/p>\n

Ten years later, the 48-year-old now lives in a much more affordable condo unit that still has enough space for his two teenage children when they stay with him. And with reduced housing costs, Mr. Fin was able to invest more money for retirement. His divorce was amicable. \u201cShe is a great ex-wife,\u201d he said. \u201cI told her from the get-go \u2018Either we get along or the lawyers get everything.\u2019\u201d<\/p>\n

More often though, middle-age divorces can shatter the most well-thought-out retirement plans. Canadians in their 40s and 50s often still have a hefty mortgage and expenses like saving for their children\u2019s education and paying for extracurricular activities. Splitting assets at this juncture and going from a couple who are sharing expenses to each supporting an individual household can throw a wrench into the most well-calibrated financial plans.<\/p>\n

So you want to sign a pre-nup before you\u2019re married? Here\u2019s what you can and can\u2019t include in Canada<\/a><\/p>\n

Add it all up, and it becomes very difficult to catch up to your retirement goals, said Barry Nussbaum, a family law attorney at Nussbaum Law in Toronto. <\/p>\n

\u201cIt would usually require you to, if you\u2019re able to, work many more hours, or get a higher paying job and make up for it,\u201d Mr. Nussbaum said. \u201cBut it\u2019s extremely difficult to make up the years, versus someone who separates when they\u2019re 25 and lost two years of joint income versus someone at 45 or 55, when they have an RRSP that now has to be shared.\u201d<\/p>\n

The value of all assets at the date of separation, including pensions, RRSPs over $100,000, and any primary residence has to be split. Divorcees don\u2019t have to actually break an RRSP or liquidate a pension, but you have to add up what everything is worth. <\/p>\n

While assets are often divided in half, it can also depend on the length of the marriage, individual preferences and how well they negotiate. Usually the settlement is reached by selling the house or another large investment.<\/p>\n

What financial experts wish you knew about divorce<\/a><\/p>\n

David Ber of Vaughan, Ont., also got divorced in his late 30s, but the event didn\u2019t affect his RRSP directly, since his wife had a similar amount stashed away. He runs a small business so has no pension. He owned a house with his ex-wife but, like Mr. Fin, he didn\u2019t consider that part of his retirement planning and prefers to invest his money in his registered accounts. <\/p>\n

\u201cI don\u2019t view house equity as a retirement plan at all,\u201d Mr. Ber said. \u201cI view it as a place to live \u2026 it\u2019s better to rely on your own money you can raise yourself than have it all in one place.\u201d<\/p>\n

His ex-wife stayed in the house and paid him out for his share. Unfortunately, the equity was heavily reduced because so much money, hundreds of thousands by the end, had gone to pay lawyers because the divorce was so contentious.<\/p>\n

It was difficult for him to re-enter the housing market \u2013 when he first got married around 2006 starter houses were around $350,000 in the area of the Greater Toronto Area in which he lives. But when he was ready to get back on the property ladder with his new wife, 12 years later, an average three-bedroom house was closer to $1-million.<\/p>\n

With the support of his family he was able to get back on his feet again and achieve the same lifestyle he had during his first marriage, but it took years and retirement planning was a secondary priority.<\/p>\n

For many women, divorce kick-starts a crash course in money management<\/a><\/p>\n

\u201cGenerally, if you\u2019re the breadwinner for most of the marriage, or all of the marriage, you basically have to split your salary or income more than half and that leaves you next to nothing to live with,\u201d Mr. Ber said. <\/p>\n

While it\u2019s difficult for the breadwinner, to pay out such a large sum, the split is also difficult in another way for the lower-income-earning partner. For many families, that\u2019s the spouse \u2013 often women \u2013 who has taken time off work to take care of kids and household tasks. Even though that person is usually entitled to half the assets and spousal support for a certain number of years to help them ease back into the work force, the years without a full-time job would likely heavily affect their earning potential.<\/p>\n

Kurt Rosentreter, a certified financial planner, doesn\u2019t mince words when he describes the effect a midlife divorce can have on retirement planning. <\/p>\n

\u201cYou just lost 15-20 years of savings time you\u2019ve given to your ex that you don\u2019t have that time to replace,\u201d Mr. Rosentreter said. \u201dSo I don\u2019t even think it\u2019s dramatic to say you\u2019re going to be delayed in your retirement or you\u2019re going to be living on a lot less than you hope.\u201d <\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Often middle-age divorces can shatter the most well-thought-out retirement plans. The value of…\n","protected":false},"author":2,"featured_media":3241,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[64,63,99,186,184,185,4825],"class_list":{"0":"post-3240","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-au","9":"tag-australia","10":"tag-business","11":"tag-finance","12":"tag-personal-finance","13":"tag-personalfinance","14":"tag-r-fp"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/3240","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=3240"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/3240\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/3241"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=3240"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=3240"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=3240"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}