‘I have $1.2 million in investments but I’m scared to leave my marriage’: The real cost of a ‘grey divorce’ for Canadian women

Over the years, Susan built up $1.67 million in investments, but those savings aren't liquid and she isn't ready to tap into them. She knows she's likely entitled to a share of marital assets — but she's worried it won't be enough to support herself, especially in retirement.

Grey divorce is on the rise in Canada

While overall divorce rates are declining, grey divorce rates aren't falling as quickly (1). In Canada, divorces are occurring between couples at increasingly older ages, with grey divorces gradually rising since 1980 (2).

The financial consequences of a later-in-life divorce are significant, and retirement security — already a concern for many people in the 50-plus age group — becomes even more precarious.

Women are particularly vulnerable. A 2024 Statistics Canada analysis found that women aged 65 and older live on significantly less income than men of the same age — $28,600 a year versus $38,700 (these figures are average income) (3). Moreover, many women who left the workforce for years to raise children or care for family members have fewer Canada Pension Plan (CPP) credits and smaller Registered Retirement Savings Plans (RRSPs).

With grey divorce, partners have less time to recover financially than those who divorce earlier in life. That's what makes advance planning and knowing what your rights are extremely crucial.

Dividing marital assets in Canada

The general principle in most provinces for dividing marital assets — particularly Ontario — is equalization of net family property (4).

In Ontario, for example, the Family Law Act entitles each spouse to share equally in the growth of family property accumulated during the marriage — not the assets themselves, but the increase in their value (5). This is calculated through an equalization payment.

The matrimonial home is treated differently, however. Even if the property is in one spouse's name — as it is in Susan's case — both spouses have an equal right to possession (6). In most provinces, neither spouse can sell or mortgage the house without the other's consent. This means Susan likely has a significant claim to their home's equity, even though her name isn't on the title.

Rules vary significantly by province. While Ontario, British Columbia and Alberta share similar equalization principles, Quebec operates under a different civil law framework (7).

If you're considering divorce, it's recommended you consult a family law lawyer in your province to understand your specific entitlements.

Splitting investments and registered accounts can be complex. Working with a financial adviser and a divorce lawyer experienced in late-life separation is wise. This isn't a time for a DIY approach, even if your split is amicable.

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What happens to RRSPs and pensions?

In Canada, an RRSP or Registered Retirement Income Fund (RRIF) can be transferred between spouses during a marriage breakdown without triggering immediate income tax — but only if the transfer is made based on a written separation agreement or court order, under s.146(16) of the Income Tax Act (8).

Defined benefit and defined contribution pension plans can also be divided at divorce under provincial pension legislation. The process and rules vary by province, so getting legal and financial advice is essential to ensure a seamless transition. These monies are easy to overlook — and can drastically reduce your income if they get left behind.

CPP and OAS: What Susan needs to know

You can collect CPP as early as age 60, but your monthly payments will be cut by 0.6% for every month you receive it before you turn 65 — that's a permanent reduction of up to 36% (9). On the other hand, delaying CPP past 65 increases the monthly amount by 0.7% monthly, up to age 70.

CPP can't be claimed based on a former spouse's earnings record. Each Canadian's CPP benefit is based on their own contributions. However, there's a provision called CPP credit-splitting: whereby credits earned during the marriage are divided equally between the spouses upon divorce, which can help a lower-earning spouse increase their eventual CPP benefit.

Meanwhile, Old Age Security (OAS) is available at age 65 to Canadians who meet residency requirements — it's not based on your earnings. Deferring OAS to age 70 increases the monthly amount you receive by 0.6% a month (10). Unlike CPP, OAS can't be split between divorced spouses.

What about spousal support?

Under the Divorce Act and provincial family law legislation, a spouse who has experienced financial setback by the marriage — for example, by reducing hours or leaving the workforce to raise children — may be entitled to spousal support from the higher-earning spouse (11).

The Spousal Support Advisory Guidelines (SSAG), developed by the Department of Justice Canada, provide a framework for calculating support amounts and duration. While the SSAG isn't a legally binding document, judges and mediators widely use it as a reference point.

For someone in Susan's situation — who left the workforce in part due to the marriage — spousal support could be a significant source of income during the transition and should be addressed.

Building a post-divorce budget — and a new retirement plan

Aside from any spousal support and settlement she might receive, Susan needs to build a realistic post-divorce budget. That means listing all expected income sources: CPP, OAS, any private pension income, RRSP/RRIF withdrawals and any investment income.

She'll also need to estimate new housing costs if she moves, as well as daily living expenses. The goal is to understand what she can truly afford as a single woman in retirement.