I’m 57, newly divorced and starting over with just $18K saved for retirement. How can I catch up in the decade I have left?

Since she wants to retire at 65, she’s asking herself if she has time to catch up. Will she have to delay her retirement — or not even retire at all?

She has a lot to consider, and plenty of options.

What is a grey divorce?

Kathryn’s situation is far from unique. In fact, it has a name: grey divorce.

Grey divorce, sometimes referred to as silver divorce, refers to couples over 50 choosing to get a divorce — often after a long marriage, when their kids have grown up and left the nest. It’s also become a lot more common in Canada over the past few decades.

According to the Department of Justice, divorce rates for couples over the age of 50 rose by 26% between 1991 and 2006 in Canada, before levelling off by 2020 (1). Meanwhile, the overall divorce rate in Canada decreased in that time — although, the age at which Canadians divorced rose steadily from 38.6 to 46 years (2).

So, why are Canadians divorcing later in life?

It could be that they stayed together for the kids, choosing to part ways once they’ve become empty nesters (3). Or maybe they’ve just been growing apart for years and their interests have changed as they’ve grown older.

“When the kids leave the house, you have the ability to be a little bit more selfish and really have that look inside of you and see what you really wanna do with life,” Jared Grossman, a Toronto-based lawyer, told CBC (4).

Even retirement itself could be a trigger if a couple’s plans aren’t in sync.

Whatever the reasons, grey divorce can have a major financial impact on an ex-couple’s golden years, especially if one partner was the runaway breadwinner.

Why is grey divorce unique?

Couples going through grey divorce face unique challenges after spending years, or decades, of their lives together, both emotionally and financially.

​​“It isn’t just about dividing property, it’s about untangling a lifetime of finances, adjusting family relationships, and planning for a future that suddenly looks very different,” writes law firm Scharff Nyland Chambers (5).

Looking at their finances, many older couples have put together a mix of investments, property and savings that could make dividing up their assets more complicated, and even contentious (6). Additional factors include inheritances and pensions, which could cause problems when deciding how to split them between parties.

Time is another big issue.

While divorce can take a financial toll on any couple, those close to retirement age, or already retired, simply have less time to rebuild their depleted funds.

While rebuilding isn’t easy, the good news is that it’s possible. While Kathryn has only $18,000 in her retirement savings, she has plenty of options to consider for getting back on track.

Where to start rebuilding

Kathryn may be eligible for alimony or spousal maintenance, although the amount and duration will vary depending on provincial laws. For example, part of her divorce agreement may include access to a portion of her ex’s retirement plans.

She may also inquire about Canada Pension Plan (CPP) credit splitting, which is mandatory in many provinces and territories, with the exception of British Columbia, Alberta, Saskatchewan and Quebec, where couples can agree not to split CPP credits (7).

Kathryn may qualify for a credit split if she meets the following criteria:

• She lived with her former spouse for at least 12 consecutive months.
• She or her ex-spouse notifies Service Canada and gives the necessary information (there is no time limit).

It’s worth noting that the rules are different if a couple is separated but still legally married or were in a common-law relationship. Additionally, some provinces can allow CPP credit splitting to be negotiated.

How to rebuild your nest egg

Once Kathryn has sorted out retirement plans and pensions with her ex-spouse, she can turn her attention to her own nest egg.

A decade isn’t a lot of time, but it’s still possible for Kathryn to build up her savings by cutting back on spending while increasing her savings rate — though that could require some sacrifices.

Kathryn might first want to make sure she’s not leaving any other money on the table in the form of shared assets, such as real estate. For example, a key consideration in a divorce can be what to do with the family home (6). A couple might decide to sell it and divide the cash or one spouse might want to buy out the other.

Kathryn may want to strike out on her own, but that might require her to downsize her living situation. If she wants to stay in the family home, however, she may have to buy out her ex-spouse.

If she does choose to keep the house, she can look to options like a spousal buyout mortgage, which is a form of refinancing a mortgage but with one big benefit: Instead of renegotiating only 80% of a property’s value (as is usual), she can go up to 95% of its value (8).

But Kathryn still needs to find the best rates. To do that, she could shop around using online aggregators like Homewise, which gives customers access to rates from 30+ lenders with one simple application.

Homewise is a free service that lets you explore mortgage options and apply for a mortgage from the comfort of your own home. Even better, no credit check is required, so you can start finding the best mortgage right away.

When to start saving?

Having figured out her housing situation, Kathryn can look for ways to increase her income and grow her retirement savings. Timing is crucial, since the clock is ticking for retirement.

To increase her savings rate, she may want to consider taking on extra hours at work or supplementing her income with gig work. Then, once she starts bringing in that extra income, she can think about where to put it.

When retirement is less than a decade away, making the most of every contribution matters. But deciding how much to invest, which accounts to use and how much risk to take can be challenging — especially when you’re rebuilding your finances after a major life change.

CIBC offers investment options and financial guidance to help Canadians develop a savings strategy that fits their goals and retirement timeline.

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Before she considers saving or investing it, however, she might want to build an emergency fund to secure herself against unforeseen expenses while also trying to pay off any high-interest debt as quickly as possible.

As its name implies, an emergency fund is for emergencies — anything from a sudden job loss to health issues — that allows you to cover unforeseen expenses without going into debt. A good way of doing this is through a high-interest savings account, which lets you access your funds when they’re needed while earning interest over time

With an EQ Bank high-interest savings account, not only can you build your emergency fund with interest rates as high as 2.75% — up to six times higher than rates offered by big-name banks in Canada — but you’re also charged no monthly fees and can make unlimited transactions without requiring a minimum balance.

And if you are worried about the security of your funds, deposits with EQ Bank are backed with CDIC deposit insurance of up to $100,000.