There are many aspects of life that need to be adjusted once a marriage dissolves, especially when it comes to finances. Alberta individuals who are divorcing later in life may need to change their retirement plans as a result of a single income and limited finances. Careful analysis of the financial situation and a newly single person’s lifestyle and expectations can help someone re-evaluate their retirement plans after a divorce.
The first thing financial experts suggest to newly single people is to look for ways to cut costs and rebuild a life that has less expenses. For example, older divorcees can downsize or move to a less-expensive area outside of Alberta’s pricier cities. Some may even choose to take on a roommate or family member to cut costs, even temporarily. Setting a budget and tracking expenses to understand where money is being spent and what cuts are possible is a good idea.
Another thing worth considering is high-cost debt. Retirement is often the most important concern for people going through a divorce in their later years, but ignoring debt with high interest rates can sabotage any well-intended RRSP contributions. People should make sure they have a well-rounded financial plan that takes both credit card payments and RRSP contributions into consideration.
Starting off in the best possible financial situation is important for creating a sustainable life after a divorce. In Alberta and the rest of Canada, divorce rates are increasing for people over 50. These types of divorce come with unique considerations, including the division of assets related to retirement. A family lawyer can help divorcees understand the legal side of these tough meditations and hearings.
Source: theprovince.com, “Retirement Planning When You Find Yourself on Your Own or Single Again“, Scott Hannah, Sept. 4, 2017
